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Major Averages Finish Choppy Session In Positive Territory - U.S. Commentary


After failing to sustain an initial upward move, stocks showed a lack of direction over the course of the trading session on Tuesday. The major averages spent the day bouncing back and forth across the unchanged line.

The major averages eventually ended the day in positive territory. The Dow inched up 9.36 points or less than a tenth of a percent to 24,884.12, the Nasdaq advanced 41.30 points or 0.6 percent to 7,372.01 and the S&P 500 rose 7.18 points or 0.3 percent to 2,728.12.

The choppy trading on the day was partly attributed to concerns about President Donald Trump's top economic advisor Gary Cohn leaving the White House.

A report from Bloomberg News said Trump believes Cohn will resign if planned tariffs on steel and aluminum imports are implemented.

Cohn has reportedly been summoning executives from U.S. companies that depend on the metals to meet with Trump this week to try to blunt or halt the tariffs.

The strength seen early in the day came amid easing geopolitical concerns following reports that North Korea is willing to talk about denuclearization.

South Korea's national security director Chung Eui-yong told reporters North Korea would be willing to denuclearize if its security was guaranteed.

"North Korea made clear its willingness to denuclearize the Korean peninsula and the fact there is no reason for it to have a nuclear program if military threats against the North are resolved and its regime is secure," Chung said.

On the U.S. economic front, the Commerce Department released a report showing a slightly bigger than expected decrease in factory orders in the month of January.

The Commerce Department said factory orders tumbled by 1.4 percent in January after jumping by an upwardly revised 1.8 percent in December.

Economists had expected factory orders to drop by 1.3 percent compared to the 1.7 percent spike originally reported for the previous month.

Sector News

Gold stocks showed a significant move to the upside on the day, driving the NYSE Arca Gold Bugs Index up by 2 percent.

The strength among gold stocks came amid a sharp increase by the price of the precious metal, as gold for April delivery jumped $15.30 to $1,335.20 an ounce.

Considerable strength was also visible among computer hardware and semiconductor stocks, with the NYSE Arca Computer Hardware Index and the Philadelphia Semiconductor Index climbing by 1.6 percent and 1.5 percent, respectively.

Tobacco, chemical, and housing stocks also saw notable strength, while telecom and utilities stocks moved to the downside on the day.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved sharply higher during trading on Tuesday. Japan's Nikkei 225 Index shot up by 1.8 percent, while Hong Kong's Hang Seng Index soared by 2.1 percent.

The major European markets also moved to the upside on the day. While the U.K.'s FTSE 100 Index rose by 0.4 percent, the German DAX Index and the French CAC 40 Index edged up by 0.2 percent and 0.1 percent, respectively.

In the bond market, treasuries showed a lack of direction before ending the session roughly flat. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 2.877 percent.

Looking Ahead

Trading on Wednesday may be impacted by reaction to reports on private sector employment, international trade and labor productivity.

The Federal Reserve is also due to release its Beige Book, a compilation of anecdotal evidence on economic conditions in the twelve Fed districts, which may shed light on the outlook for interest rates.

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