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Stocks May Move Back To The Upside In Early Trading - U.S. Commentary


Following the first losing session of the new year, stocks may move back to the upside in early trading on Thursday. The major index futures are currently pointing to a higher open for the markets, with the Dow futures up by 23 points.

Stocks may benefit from easing concerns about treasuries after China dismissed a Bloomberg News report that officials have recommended slowing or halting purchases of U.S. debt.

"The news could quote the wrong source of information, or may be fake news," China's State Administration of Foreign Exchange said, according to Reuters.

The SAFE said China has been diversifying its foreign currency reserves investments to help "safeguard the overall safety of foreign exchange assets and preserve and increase their value."

Early buying interest may be somewhat subdued, however, after a report from the Labor Department showed another unexpected increase in first-time claims for U.S. unemployment benefits.

The report said initial jobless claims rose to 261,000 in the week ended January 6th, an increase of 11,000 from the previous week's unrevised level of 250,000.

The modest increase came as a surprise to economists, who had expected initial jobless claims to edge down to 245,000.

A separate report from the Labor Department unexpectedly showed a modest decrease in producer prices in the month of December.

The Labor Department said its producer price index for final demand edged down by 0.1 percent in December after climbing by 0.4 percent in November. Economists had expected prices to rise by 0.2 percent.

Excluding food and energy prices, core producer prices still dipped by 0.1 percent in December following a 0.3 percent increase in November. Core prices had also been expected to tick up by 0.2 percent.

After coming under pressure early in the session, stocks regained ground over the course of the trading day on Wednesday. The major averages climbed well off their worst levels of the day but still closed in negative territory.

The major averages posted modest losses on the day, with the S&P 500 and the Nasdaq closing lower for the first time in 2018. The Dow dipped 16.67 points or 0.1 percent to 25,369.13, the Nasdaq edged down 10.01 points or 0.1 percent to 7,153.57 and the S&P 500 slipped 3.06 points or 0.1 percent to 2,748.23.

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Thursday. Japan's Nikkei 225 Index fell by 0.3 percent, while Hong Kong's Hang Seng Index inched up by 0.2 percent.

Meanwhile, the major European markets have all moved to the downside on the day. While the U.K.'s FTSE 100 Index is just below the unchanged line, the French CAC 40 Index is down by 0.2 percent and the German DAX Index is down by 0.3 percent.

In commodities trading, crude oil futures are rising $0.32 to $63.89 a barrel after climbing $0.61 to $63.57 a barrel on Wednesday. An ounce of gold is trading at $1,322.20, up $2.90 compared to the previous session's close of $1,319.30. On Wednesday, gold rose $5.60.

On the currency front, the U.S. dollar is trading at 111.53 yen compared to the 111.44 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.2027 compared to yesterday's $1.1948.

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