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Stocks Rally As Traders Continue To Shrug Off Trade Dispute - U.S. Commentary

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Stocks moved sharply higher over the course of the trading day on Thursday, extending the upward move seen over the past few sessions. With the gains on the day, the Dow and the S&P 500 reached new record closing highs.

The major averages pulled back off their highs going into the close but held on to significant gains. The Dow jumped 251.22 points or 1 percent to 26,656.98, the Nasdaq surged up 78.19 points or 1 percent to 8,028.23 and the S&P 500 advanced 22.80 points or 0.8 percent to 2,930.75.

The rally on Wall Street came as traders continued to shrug off concerns about the escalating trade dispute between the U.S. and China.

JPMorgan Chase CEO Jamie Dimon sought to downplay the trade dispute in comments to CNBC-TV18, calling it a "trade skirmish" rather than a trade war.

Upbeat economic data also generated some positive sentiment, with a report from the Labor Department showing initial jobless claims unexpectedly dipped to their lowest level in nearly fifty years in the week ended September 15th.

The Labor Department said jobless claims edged down to 201,000, a decrease of 3,000 from the previous week's unrevised level of 204,000. Economists had expected jobless claims to rise to 210,000.

With the unexpected decrease, jobless claims fell to their lowest level since hitting 197,000 in November of 1969.

A separate report from the Conference Board showed a continued increase by its index of leading economic indicators in the month of August.

The Conference Board said its leading economic index rose by 0.4 percent in August after climbing by an upwardly revised 0.7 percent in July.

"The leading indicators are consistent with a solid growth scenario in the second half of 2018 and at this stage of a maturing business cycle in the U.S., it doesn't get much better than this," said Ataman Ozyildirim, Director of Business Cycles and Growth Research at the Conference Board.

He added, "The strengths among the LEI's components were very widespread, further supporting an outlook of above 3.0 percent growth for the remainder of 2018."

Meanwhile, the National Association of Realtors released a report showing existing home sales were unexpectedly flat in August, with sales growth in the Northeast and Midwest offset by downturns in the South and West.

Sector News

Tobacco stocks moved substantially higher over the course of the trading session, driving the NYSE Arca Tobacco Index up by 5 percent. With the jump, the index reached a record closing high.

The rally by tobacco stocks came after FDA Commissioner Scott Gottlieb told CNBC the agency may fast-track the review process for e-cigarettes that include features that make the products less likely to be used by kids.

Significant strength was also visible among computer hardware stocks, as reflected by the 2.2 percent gain posted by the NYSE Arca Computer Hardware Index. The index bounced off its lowest closing level in over four months.

Biotechnology stocks also turned in a strong performance on the day, resulting in a 2.1 percent advance by the NYSE Arca Biotechnology Index.

Steel, chemical, banking, and semiconductor stocks also moved notably higher, reflecting broad based buying interest on Wall Street.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a lackluster performance during trading on Thursday. Japan's Nikkei 225 Index closed just above the unchanged line, while China's Shanghai Composite Index edged down by 0.1 percent.

Meanwhile, the major European markets moved to the upside on the day. While the U.K.'s FTSE 100 Index climbed by 0.5 percent, the German DAX Index advanced by 0.9 percent and the French CAC 40 Index jumped by 1.1 percent.

In the bond market, treasuries pulled back near the unchanged line after seeing modest strength for much of the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 3.078 percent.

Looking Ahead

A quiet day on the U.S. economic front may keep some traders on the sidelines on Friday ahead of next week's Federal Reserve meeting.

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