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Stocks Move Back To The Upside After Morning Fluctuations - U.S. Commentary

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Stocks fluctuated over the course of the morning but are once again firmly positive in mid-day trading on Wednesday. With the advanced on the day, the major averages are extending the upward move seen over the three previous sessions.

In recent trading, the Nasdaq and the S&P 500 reached new highs for the session. The Dow is up 148.39 points or 0.6 percent at 23,935.84, the Nasdaq is up 56.22 points or 0.8 percent at 6,953.22 and the S&P 500 is up 13.55 points or 0.5 percent at 2,587.96.

The markets continue to benefit from optimism about a potential trade deal between the U.S. and China after talks between U.S. and Chinese officials were extended to a third day.

Officials have not made public comments about the outcome of the talks, although traders remain hopeful the U.S. and China will reach a long-term trade agreement before a March 1st deadline.

Buying interest is somewhat subdued, however, as traders look ahead to this afternoon's release of the minutes of the Federal Reserve's latest monetary policy meeting.

The minutes of the December meeting will provide further insight into the Fed's decision to raise interest rates by 25 basis points to a range of 2.25 percent to 2.50 percent.

Traders are likely to scrutinize the minutes for clues about the outlook for interest rates after Fed Chairman Jerome Powell noted last Friday the central bank "will be patient" as it watches the economy evolve.

The continued strength on Wall Street comes even as the partial government shutdown seems likely to continue after President Donald Trump and Democratic leaders addressed the nation last night.

Both Trump and the Democrats seemed dug in on their positions over the president's demand for $5.7 billion to construct a wall on the U.S. border with Mexico.

Sector News

Benefiting from a sharp increase by the price of crude oil, oil service stocks have shown a substantial move to the upside over the course of the trading session.

Reflecting the strength in the sector, the Philadelphia Oil Service Index has spiked by 2.8 percent to its best intraday level in almost a month.

The rally by oil service stocks comes as crude oil for February delivery is soaring $2.67 to $52.45 a barrel following the release of a report showing a smaller than expected weekly drop in crude oil inventories.

Significant strength also remains visible among semiconductor stocks, as reflected by the 2.5 percent jump by the Philadelphia Semiconductor Index.

Skyworks Solutions (SWKS) is posting a strong gain even though the maker of high-performance analog semiconductors lowered its fiscal first quarter guidance due to unit weakness across its largest smartphone customers.

Computer hardware, housing, and steel stocks are also seeing considerable strength on the day, while telecom and commercial real estate stocks have moved to the downside.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan's Nikkei 225 Index jumped by 1.1 percent, while Hong Kong's Hang Seng Index soared by 2.3 percent.

The major European markets also moved to the upside on the day. While the U.K.'s FTSE 100 Index climbed 0.7 percent, the German DAX Index and the French CAC 40 Index both advanced by 0.8 percent.

In the bond market, treasuries have pulled back after recovering from an initial move to the downside. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 1.9 basis points at 2.735 percent.

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