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Optimism About Trade Talks Leads To Strength On Wall Street - U.S. Commentary

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Following the substantial volatility seen in the previous session, stocks closed mostly higher on Wednesday, as traders expressed renewed optimism about U.S.-China trade talks after waffling between hopeful and skeptical on Tuesday.

The major averages pulled back off their best levels in afternoon trading but remained firmly positive. The Dow climbed 157.03 points or 0.6 percent to 24,527.27, the Nasdaq jumped 66.48 points or 1 percent to 7,098.31 and the S&P 500 rose 14.29 points or 0.5 percent to 2,651.07.

The strength on Wall Street came after President Donald Trump expressed optimism about striking a trade deal with Chinese President Xi Jinping in an interview with Reuters on Tuesday.

Trump noted that trade talks between U.S. and Chinese officials were underway by telephone and suggested more meetings are likely.

"We'll probably have another meeting. And maybe a meeting of the top people on both sides," Trump said. "If it's necessary, I'll have another meeting with President Xi, who I like a lot and get along with very well."

Trump also indicated he would be willing to intervene with the Justice Department in the case against Huawei Chief Financial Officer Meng Wanzhou if it would help secure a trade deal with China.

"If I think it's good for the country, if I think it's good for what will be certainly the largest trade deal ever made - which is a very important thing - what's good for national security - I would certainly intervene if I thought it was necessary," Trump said.

On the U.S. economic front, the Labor Department released a report showing consumer prices came in flat in the month of November, with a sharp pullback in gasoline prices offsetting increases in other prices.

The Labor Department said its consumer price index was unchanged in November after rising by 0.3 percent in October. The unchanged reading matched economist estimates.

Excluding food and energy prices, core consumer prices edged up by 0.2 percent in November, matching the uptick seen in October as well as expectations.

Sector News

Gold stocks showed a substantial move to the upside over the course of the trading session, driving the NYSE Arca Gold Bugs Index up by 2.6 percent. With the jump, the index reached a four-month closing high.

The rally by gold stocks came amid an increase by the price of the precious metal, as gold for February delivery rose $2.80 to $1,250 an ounce.

Significant strength was also visible among networking stocks, as reflected by the 1.7 percent advance by the NYSE Arca Networking Index.

Biotechnology stocks, semiconductor, and oil service stocks also saw notable strength on the day, moving higher along with most of the other major sectors.

Meanwhile, commercial real estate stocks bucked the uptrend on Wall Street, resulting in a 1.7 percent drop by the Dow Jones Real Estate Index.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved notably higher during trading on Wednesday. Japan's Nikkei 225 Index spiked by 2.2 percent, while Hong Kong's Hang Seng Index jumped by 1.6 percent.

The major European markets also showed strong moves to the upside on the day. While the French CAC 40 Index soared by 2.2 percent, the German DAX Index and the U.K.'s FTSE 100 Index surged up by 1.4 percent and 1.1 percent, respectively.

In the bond market, treasuries extended the modest pullback seen over the course of the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed by 2.7 basis points at 2.906 percent.

Looking Ahead

Developments regarding the U.S.-China trade talks may impact trading on Thursday along with reports on weekly jobless claims and import and export prices.

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