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Stocks Rebound After Seeing Initial Weakness - U.S. Commentary


After an initial move to the downside, stocks have turned higher over the course of morning trading on Thursday. The major averages have bounced well off their lows of the young session and into positive territory.

Currently, the major averages are posting modest gains. The Dow is up 56.41 points or 0.2 percent at 24,825.34, the Nasdaq is up 19.63 points or 0.3 percent at 7,417.92 and the S&P 500 is up 7.49 points or 0.3 percent at 2,729.95.

Energy stocks have helped to lead the rebound on Wall Street, benefiting from an increase by the price of crude oil. Crude for June delivery is climbing $0.41 to $71.90 a barrel.

Within the energy sector, oil service stocks are posting particularly strong gains, driving the Philadelphia Oil Service Index up by 2.9 percent.

Transportation stocks are also seeing notable strength in morning trading, while most of the other major sectors are showing more modest moves.

On the U.S. economic front, the Conference Board released a report showing a continued increase by its index of leading economic indicators.

The Conference Board said its leading economic index rose by 0.4 percent in April, matching the upwardly revised increase in March as well as economist estimates.

Ataman Ozyildirim, Director of Business Cycles and Growth Research at the Conference Board, said, "April's increase and continued uptrend in the U.S. LEI suggest solid growth should continue in the second half of 2018."

"However, the LEI's six-month growth rate has recently moderated somewhat, suggesting growth is unlikely to strongly accelerate," he added.

Before the start of trading, the Labor Department released a report showing a bigger than expected increase in initial jobless claims in the week ended May 12th.

The report said initial jobless claims rose to 222,000, an increase of 11,000 from the previous week's unrevised level of 211,000. Economists had expected jobless claims to inch up to 215,000.

Meanwhile, a separate report from the Philadelphia Federal Reserve unexpectedly showed a significant acceleration in the pace of growth in regional manufacturing activity in the month of May.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. Japan's Nikkei 225 Index climbed by 0.5 percent, while Hong Kong's Hang Seng Index fell by 0.5 percent.

Meanwhile, the major European markets have all moved to the upside on the day. While the German DAX Index has advanced by 0.7 percent, the French CAC 40 Index is up by 0.6 percent and the U.K.'s FTSE 100 Index is up by 0.4 percent.

In the bond markets, treasuries have climbed back near the unchanged line after seeing initial weakness. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by less than a basis point at 3.098 percent.

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