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Stocks Pull Back Off Best Levels But Remain Mostly Positive - U.S. Commentary

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After moving sharply higher early in the session, stocks have given back some ground over the course of the trading day on Tuesday. The major averages have pulled back well off their best levels of the day but remain in positive territory.

Currently, the tech-heavy Nasdaq is outperforming the other major averages. While the Nasdaq is up 56.66 points or 0.8 percent at 7,077.18, the S&P 500 is up 11.79 points or 0.5 percent at 2,649.51 and the Dow is up 55.92 points or 0.2 percent at 24,479.18.

The early rally on Wall Street partly reflected renewed optimism about U.S.-China trade talks after a telephone call between top officials from the world's two largest economies.

China's Commerce Ministry said Chinese Vice Premier Liu He spoke with U.S. Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer.

"Both sides exchanged views on putting into effect the consensus reached by the two countries' leaders at their meeting, and pushing forward the timetable and roadmap for the next stage of economic and trade consultations work," the ministry said in a statement.

Indications the talks are moving forward has offset some of the skepticism about the potential for a trade deal after U.S. President Donald Trump and Chinese President Xi Jinping agreed to a 90-day trade truce earlier this month.

A report from Bloomberg News that China is moving toward cutting tariffs on imported U.S.-made cars added to the positive sentiment.

Citing people familiar with the matter, Bloomberg said a proposal to reduce tariffs on cars made in the U.S. to 15 percent from the current 40 percent has been submitted to China's Cabinet.

Just after his meeting with Xi, Trump claimed in a post on Twitter that China had agreed to reduce and remove tariffs on cars coming into China from the U.S.

Meanwhile, traders have largely shrugged off a report from the Labor Department unexpectedly showing a modest uptick in producer prices in the month of November.

The Labor Department said its producer price index for final demand inched up by 0.1 percent in November after climbing by 0.6 percent in October. Economists had expected prices to be unchanged.

Excluding food and energy prices, core producer prices rose by 0.3 percent in November following a 0.5 percent increase in October. Core prices had been expected to edge up by 0.1 percent.

Sector News

Most of the major sectors have pulled back off their best levels of the day, although significant strength remains visible among semiconductor stocks.

Reflecting the strength in the sector, the Philadelphia Semiconductor Index is up by 1.4 percent, continuing to rebound after ending last Friday's trading at its lowest closing level in over a month.

Software and networking stocks are also holding on to notable gains, helping to keep the tech-heavy Nasdaq firmly in positive territory.

Most of the other sectors have maintained a positive bias but are showing more modest moves to the upside on the day.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. Japan's Nikkei 225 index fell by 0.3 percent, while Hong Kong's Hang Seng Index crept up by 0.1 percent.

Meanwhile, the major European markets all showed strong moves to the upside on the day. While the German DAX Index surged up by 1.5 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index jumped by 1.4 percent and 1.3 percent, respectively.

In the bond market, treasuries have climbed back near the unchanged line after seeing early weakness. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by less than a basis point at 2.857 percent.

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