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Stocks Fluctuate But Manage To Close Mostly Higher - U.S. Commentary

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Stocks fluctuated over the course of the trading session on Wednesday but largely maintained a positive bias before closing mostly higher. The upward move on the day came on the heels of the sharp pullback seen in the previous session.

The major averages closed in positive territory but well off their highs of the session. The Dow rose 62.52 points or 0.3 percent to 24,768.93, the Nasdaq advanced 46.67 points or 0.6 percent to 7,398.30 and the S&P 500 climbed 11.01 points or 0.4 percent to 2,722.46.

The strength on Wall Street partly reflected a positive reaction to earnings news from Macy's (M), with the department store operator surging up by 10.8 percent.

Macy's jumped to its best closing level in over a year after reporting better than expected first quarter results and providing upbeat guidance.

Buying interest was somewhat subdued, however, with geopolitical uncertainty keeping some traders on the sidelines after North Korea threatened to cancel an historic meeting between leader Kim Jong Un and President Donald Trump.

In a statement published by the state-run Korean Central News Agency, North Korean First Vice Minister of Foreign Affairs Kim Kye Gwan suggested that Trump must accept the reclusive communist country as a nuclear power.

"If the U.S. is trying to drive us into a corner to force our unilateral nuclear abandonment, we will no longer be interested in such dialogue and cannot but reconsider our proceeding to the DPRK-U.S. summit," Kim said.

Kim pointed to "unbridled remarks" by U.S. officials such as National Security Adviser John Bolton calling on North Korea to abandon nuclear weapons first and be compensated afterward.

The statement from Kim came after North Korea canceled high-level talks with South Korea planned for Wednesday over U.S.-South Korean military drills.

Despite the threats, White House Press Secretary Sarah Sanders said the administrations remains hopeful the meeting will take place.

On the U.S. economic front, the Commerce Department released a report showing a sharp pullback in new residential construction in the month of April.

The report said housing starts plunged by 3.7 percent to an annual rate of 1.287 million in April after jumping by 3.6 percent to an upwardly revised 1.336 million in March.

Economists had expected housing starts to drop to an annual rate of 1.310 million from the 1.319 million originally reported for the previous month.

The Commerce Department said building permits also tumbled by 1.8 percent to an annual rate of 1.352 million in April after surging up by 4.1 percent to an upwardly revised 1.377 million in March.

Building permits, an indicator of future housing demand, had been expected to edge down to 1.350 million from the 1.354 million originally reported for the previous month.

A separate report from the Federal Reserve showed industrial production increased by slightly more than anticipated in the month of April.

The Fed said industrial production climbed by 0.7 percent in April, matching the upwardly revised increase in March. Economists had expected industrial production to rise by 0.6 percent.

Sector News

Steel stocks turned in some of the market's best performances, resulting in a 2.1 percent jump by the NYSE Arca Steel Index. With the gain, the index reached its best closing level in well over two months.

Considerable strength also emerged among computer hardware stocks, as reflected by the 1.5 percent gain posted by the NYSE Arca Computer Hardware Index. The advance lifted the index to a record closing high.

Hard drive and memory chip maker Western Digital (WDC) lead the hardware sector higher, surging up by 4.9 percent on the day.

Semiconductor stocks also showed a significant move to the upside, driving the Philadelphia Semiconductor Index up by 1.4 percent.

Micron Technology (MU) posted a standout gain after RBC Capital initiated coverage of the chipmaker's stock with an Outperform rating.

Tobacco, oil service, and natural gas stocks also saw notable strength on the day, while weakness was visible among utilities stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan's Nikkei 225 Index fell by 0.4 percent, while Hong Kong's Hang Seng Index edged down by 0.1 percent.

Meanwhile, the major European markets showed modest moves to the upside on the day. While the French CAC 40 Index rose by 0.3 percent, the German DAX Index and the U.K.'s FTSE 100 Index both crept up by 0.2 percent.

In the bond market, treasuries moved modestly lower over the course of the session after seeing early strength. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by 1.5 basis points to a nearly seven-year closing high of 3.095 percent.

Looking Ahead

Trading on Thursday may be impacted by reaction to reports on weekly jobless claims, leading economic indicators, and Philadelphia-area manufacturing activity.

Earnings news is also likely to attract attention, with networking giant Cisco Systems (CSCO) among the companies release their quarterly results after the close of today's trading.

Retail giant Wal-Mart (WMT) is also among the companies due to report their quarterly results before the start of trading on Thursday.

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