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Nasdaq Rebounding But Dow Roughly Flat - U.S. Commentary


Stocks are turning in a relatively lackluster performance in mid-day trading after trending lower over the past few sessions. While the Nasdaq is rebounding following the recent pullback, the Dow is lingering near the unchanged line.

Currently, the major averages are mixed. The Dow is down 19.25 points or 0.1 percent at 25,976.62, but the Nasdaq is up 26.65 points or 0.3 percent at 7,949.38 and the S&P 500 is up 1.88 points or 0.1 percent at 2,879.93.

The choppy trading on Wall Street comes following the release of a closely watched Labor Department report showing stronger than expected job growth in the month of August.

The Labor Department said non-farm payroll employment surged up by 201,000 jobs in August after climbing by a downwardly revised 147,000 jobs in July.

Economists had expected employment to increase by about 191,000 jobs compared to the addition of 157,000 jobs originally reported for the previous month.

The report also said the annual rate of average hourly employee earnings growth accelerated to 2.9 percent in August from 2.7 percent in July.

The data paints a positive picture of the economy but has also reinforced expectations the Federal Reserve will raise interest rates later this month.

"This report is strong throughout and with the economy likely to grow more than 3% again in 3Q18 it will keep the Fed hiking interest rates with another move in September with a further increase in December," said James Knightley, Chief International Economist at ING.

Traders are also expressing some uncertainty about trade following the expiration of a public comment period on new U.S. tariffs on $200 billion worth of Chinese goods.

President Donald Trump's chief economic adviser Larry Kudlow told Bloomberg the administration is reviewing the comments but declined to say when a decision on the tariffs will be announced.

Most of the major sectors continue to show only modest moves on the day, contributing to the lackluster performance by the broader markets.

Networking and semiconductor stocks are regaining some ground following recent weakness, while interest rate concerns are weighing on housing, commercial real estate and utilities stocks.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Friday. Japan's Nikkei 225 Index slid by 0.8 percent, while Hong Kong's Hang Seng Index closed just below the unchanged line.

Meanwhile, the major European markets turned in a mixed performance on the day. While the U.K.'s FTSE 100 Index fell by 0.6 percent, the German DAX Index closed marginally higher and the French CAC 40 Index edged up by 0.2 percent.

In the bond market, treasuries have moved significantly lower following the upbeat jobs data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 6.3 basis points at 2.942 percent.

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