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Stocks Giving Back Ground After Early Rally - U.S. Commentary

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After moving notably higher early in the session, stocks have given back some ground over the course of morning trading on Tuesday. The major averages have pulled back off their highs of the session but remain in positive territory.

Currently, the major averages are holding on to modest gains. The Dow is up 121.51 points or 0.5 percent at 23,652.86, the Nasdaq is up 11.22 points or 0.2 percent at 6,834.69 and the S&P 500 is up 7.60 points or 0.3 percent at 2,557.29.

Optimism about trade talks between the U.S. and China contributed to the early rally on Wall Street amid a second day of meetings between U.S. and Chinese officials.

The second day of negotiations coincided with an unannounced visit by North Korean leader Kim Jong Un, with some analysts saying China could use Kim's visit as a bargaining chip in the trade talks.

In a post on Twitter this morning, President Donald Trump claimed, "Talks with China are going very well!"

Traders remain skeptical about the potential for a long-term trade deal, however, potentially keeping buying interest somewhat subdued.

A relatively quiet day on the U.S. economic front may also keep some traders on the sidelines amid the ongoing government shutdown.

Later tonight, Trump is scheduled to deliver a national address on what his administration has described as a "crisis" on the southern border.

Trump has made numerous attempts to draw public attention to problems caused by illegal immigrants amid an impasse over funding for his controversial border wall.

The president has recently suggested he could bypass Congress and obtain funding for the wall by declaring the situation on the border a national emergency.

Suggesting Trump's national address will be "full of malice and misinformation," Democratic leaders have demanded equal airtime to respond to the president's remarks.

House Speaker Nancy Pelosi, D-Calif., and Senate Minority Leader Chuck Schumer, D-N.Y., released a joint statement after the major broadcast and cable news networks agreed to air Trump's address.

Extending a recent upward trend, natural gas stocks have moved notably higher in morning trading. The NYSE Arca Natural Gas Index is up by 1.7 percent after reaching its best intraday level in almost a month.

The strength among natural gas stocks comes amid an increase by the price of the commodity, with natural gas for February delivery rising $0.083 to $3.027 per million BTUs.

Considerable strength is also visible among transportation stocks, as reflected by the 1.3 percent advance by the Dow Jones Transportation Average.

Union Pacific (UNP) is posting a standout gain after the railway operator named industry veteran Jim Vena as its chief operating officer.

On the other hand, semiconductor stocks have moved to the downside following disappointing guidance from Samsung, dragging the Philadelphia Semiconductor Index down by 1.1 percent.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. Japan's Nikkei 225 Index advanced by 0.8 percent, while China's Shanghai Composite Index fell by 0.3 percent.

Meanwhile, the major European markets have all moved to the upside on the day. While the French CAC 40 Index has jumped by 1.7 percent, the German DAX Index and the U.K.'s FTSE 100 Index are both up by 1.1 percent.

In the bond market, treasuries are extending the pullback seen over the course of the two previous sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 2.1 basis points at 2.703 percent.

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