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Stocks Turn Mixed As Fed Announcement Looms - U.S. Commentary


After moving modestly lower early in the session, stocks have turned mixed over the course of the trading day on Thursday. While the Nasdaq remains in the red, the Dow has climbed into positive territory and reached its best intraday level in almost a month.

Currently, the major averages remain on opposite sides of the unchanged line. The Dow is up 66.75 points or 0.3 percent at 26,247.05, but the Nasdaq is down 20.84 points or 0.3 percent at 7,549.92 and the S&P 500 is down 1.45 points or 0.1 percent at 2,812.44.

Profit taking contributed to initial weakness on Wall Street after yesterday's rally, although selling pressure remained relatively subdued.

Traders seem reluctant to make more significant moves ahead of the Federal Reserve's monetary policy announcement this afternoon.

The Fed is widely expected to leave interest rates unchanged, but the accompanying statement may shed additional light on the anticipated rate hike in December.

CME Group's FedWatch tool indicates only a 7 percent chance the Fed will raise rates today but a 75 percent chance for a 25 basis point increase in rates next month.

On the U.S. economic front, the Labor Department released a report showing a slight drop in initial jobless claims in the week ended November 3rd.

The report said initial jobless claims edged down to 214,000, a decrease of 1,000 from the previous week's revised level of 215,000.

Economists had expected jobless claims to dip to 213,000 from the 214,000 originally reported for the previous week.

Sector News

Tobacco stocks continue to see substantial weakness in mid-day trading after gapping open sharply lower. Reflecting the weakness in the sector, the NYSE Arca Tobacco Index is down by 4.6 percent after hitting a two-month intraday low.

Significant weakness has also emerged among oil service stocks, as reflected by the 1.9 percent drop by the Philadelphia Oil Service Index.

The weakness in the oil service sector comes amid a continued decrease by the price of crude oil, with crude for December delivery sliding $0.65 to $61.02 a barrel.

Housing and networking stocks are also seeing considerable weakness on the day, while banking stocks have shown a strong move to the upside.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Thursday. Japan's Nikkei 225 Index jumped by 1.8 percent, while Hong Kong's Hang Seng Index rose by 0.3 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the U.K.'s FTSE 100 Index climbed by 0.3 percent, the French CAC 40 Index edged down by 0.1 percent and the German DAX Index fell by 0.5 percent.

In the bond market, treasuries have moved modestly lower ahead of this afternoon's Fed announcement. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 1.5 basis points at 3.228 percent.

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