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Major Averages Hovering Firmly In Positive Territory - U.S. Commentary


Following the modest pullback seen in the previous session, stocks have moved mostly higher during trading on Thursday. With the upward move on the day, the Dow and the Nasdaq have reached new record intraday highs.

Currently, the major averages are hovering firmly in positive territory. The Dow is up 117.87 points or 0.5 percent at 25,487.00, the Nasdaq is up 28.59 points or 0.4 percent at 7,182.16 and the S&P 500 is up 9.99 points or 0.4 percent at 2,758.22.

The rebound on Wall Street may be partly due to 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."

Meanwhile, traders have largely shrugged off a report from the Labor Department showing 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.

Sector News

Energy stocks have moved sharply higher over the course of the session, benefiting from a continued increase by the price of crude oil.

After reaching a three-year intraday high of $64.77 a barrel, crude oil for February delivery is up $0.95 at $64.52 a barrel.

Reflecting the strength in the energy sector, the Philadelphia Oil Service Index and the Natural Gas Index are both up by 2.8 percent and the NYSE Arca Oil & Gas Index is up by 1.8 percent.

Significant strength also remains visible among airline stocks, as reflected by the 2.2 percent jump by the NYSE Arca Airline Index. The index has reached its best intraday level in almost six months.

Within the airline sector, Delta Air Lines (DAL) is posting a notable gain after beating fourth quarter expectations and raising its 2018 earnings guidance.

Steel, tobacco, computer hardware, and housing stocks are also seeing considerable strength in mid-day trading, moving higher along with most of the other major sectors.

Other Markets

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.

The major European markets also ended the day mixed. While the U.K.'s FTSE 100 Index edged up by 0.2 percent, the French CAC 40 Index dipped by 0.3 percent and the German DAX Index slid by 0.6 percent.

In the bond market, treasuries are seeing modest weakness after ending the previous session roughly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by nearly a basis point at 2.559 percent.

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