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Stocks Turn Positive After Seeing Initial Weakness - U.S. Commentary

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After initially moving to the downside, stocks have shown a significant turnaround over the course of the trading session on Monday. The major averages have bounced well off their worst levels of the day and into positive territory.

In recent trading, the major averages have pulled back off their highs of the session, although they continue to post notable gains. The Dow is up 159.89 points or 0.7 percent at 24,697.95, the Nasdaq is up 50.64 points or 0.7 percent at 7,308.51 and the S&P 500 is up 18.56 points or 0.7 percent at 2,709.81.

The rebound on Wall Street reflects recent volatility in the markets amid uncertainty about a potential global trade war and an increase in interest rates.

Lingering concerns about a trade war contributed to the initial weakness, as President Donald Trump plans to implement tariffs on steel and aluminum imports.

In a post on Twitter, Trump indicated that the tariffs on steel and aluminum would only be removed if the U.S. negotiates a "new & fair" NAFTA agreement.

"We have large trade deficits with Mexico and Canada. NAFTA, which is under renegotiation right now, has been a bad deal for U.S.A. Massive relocation of companies & jobs. Tariffs on Steel and Aluminum will only come off if new & fair NAFTA agreement is signed," Trump tweeted.

He added, "Also, Canada must treat our farmers much better. Highly restrictive. Mexico must do much more on stopping drugs from pouring into the U.S. They have not done what needs to be done. Millions of people addicted and dying."

Trading activity is somewhat subdued, however, as traders look ahead to the Labor Department's monthly employment report due to be released on Friday.

On the U.S. economic front, the Institute for Supply Management released a report showing a slight slowdown in the pace of growth in the service sector in the month of February.

The ISM said its non-manufacturing index edged down to 59.5 in February from 59.9 in January, although a reading above 50 still indicates growth in the service sector. Economists had expected the index to dip to 59.0.

The modest decrease by the index was partly due to a slowdown in the pace of job growth in the service sector, as the employment index dropped to 55.0 in February from 61.6 I January.

Sector News

Tobacco stocks have shown a significant move to the upside on the day, driving the NYSE Arca Tobacco Index up by 1.8 percent.

Significant strength is also visible among energy stocks, which are moving higher along with the price of crude oil. Crude for April delivery is jumping $1.38 to $62.63 a barrel.

Brokerage, computer hardware, and real estate stocks have also shown strong moves to the upside, moving higher along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Monday. Japan's Nikkei 225 Index fell by 0.7 percent, while Hong Kong's Hang Seng Index plummeted by 2.3 percent.

Meanwhile, the major European markets moved to the upside on the day. While the German DAX Index jumped 1.6 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index climbed by 0.8 percent and 0.7 percent, respectively.

In the bond market, treasuries have turned negative after an initial move to the upside. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 1.8 basis points at 2.875 percent.

by RTTNews Staff Writer

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