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Stocks May Rebound Following Yesterday's Pullback - U.S. Commentary

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Following the pullback seen in the previous session, stocks are likely to move back to the upside in early trading on Thursday. The major index futures are currently pointing to a higher open for the markets, with the Dow futures up by 206 points.

The upward momentum on Wall Street comes amid easing trade war concerns after news of U.S. threats of a new 10 percent tariff on $200 billion worth of Chinese imports contributed to the weakness on Wednesday.

China vowed to take countermeasures in response to the new tariffs, although the markets may respond positively to the lack of the announcement of specific retaliation by the Chinese.

Traders also seem optimistic the continued tariff threats will eventually bring the U.S. and China to the table for talks that could result in a long-term trade agreement.

On the U.S. economic front, the Labor Department released a report showing consumer prices edged slightly higher in the month of June.

The Labor Department said its consumer price index inched up by 0.1 percent in June after rising by 0.2 percent in May. Economists had expected consumer prices to increase by 0.2 percent.

Excluding food and energy prices, core consumer prices rose by 0.2 percent for the second consecutive month, matching economist estimates.

While consumer prices showed only a modest monthly increase, the annual rate of growth still accelerated to a more than six-year high of 2.9 percent in June from 2.8 percent in May.

Core consumer price growth also edged up to 2.3 percent in June from 2.2 percent in May, reaching its highest level since January of 2017.

A separate report from the Labor Department showed first-time claims for unemployment benefits fell by more than expected in the week ended July 7th.

The report said initial jobless claims dropped to 214,000, a decrease of 18,000 from the previous week's revised level of 232,000.

Economists had expected jobless claims to edge down to 225,000 from the 231,000 originally reported for the previous week.

After trending higher over the past several sessions, stocks gave back some ground during trading on Wednesday amid renewed trade concerns. With the drop on the day, the S&P 500 pulled back off its best closing level in five months.

The major averages ended the session firmly in negative territory but off their worst levels of the day. The Dow slumped 219.21 points or 0.9 percent to 24,700.45, the Nasdaq fell 42.59 points or 0.6 percent to 7,716.61 and the S&P 500 slid 19.82 points or 0.7 percent to 2,774.02.

In overseas trading, stock markets across the Asia-Pacific region rebounded during trading on Thursday following yesterday's sell-off. Japan's Nikkei 225 Index jumped by 1.2 percent, while China's Shanghai Composite Index spiked by 2.2 percent.

The major European markets have also moved back to the upside on the day. While the German DAX Index has climbed by 0.5 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index are both up by 0.9 percent.

In commodities trading, crude oil futures are rebounding $0.68 to $71.06 a barrel after plunging $3.73 to $70.38 a barrel on Wednesday. Meanwhile, an ounce of gold is trading at $1,245.80, up $1.40 compared to the previous session's close of $1,244.40. On Wednesday, gold slumped $11.

On the currency front, the U.S. dollar is trading at 112.48 yen compared to the 112.01 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is unchanged compared to yesterday's $1.1674.

by RTTNews Staff Writer

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