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Stocks Rebound From Early Sell-Off To Close Sharply Higher - U.S. Commentary

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After extending a recent downward trend early in the session, stocks showed a substantial turnaround over the course of the trading session on Thursday. The major averages bounced well off their lows of the session and firmly into positive territory.

The major averages pulled back off their best levels but held on to strong gains into the close. The Dow advanced 208.77 points or 0.8 percent to 25,289.27, the Nasdaq soared 122.64 points or 1.7 percent to 7,259.03 and the S&P 500 jumped 28.62 points or 1.1 percent to 2,730.20.

The rebound on Wall Street came amid optimism about trade after a report from the Financial Times said the U.S. and China have intensified efforts to reach a trade agreement at the G20 summit later this month.

The FT said negotiators stepped up efforts following a telephone call between U.S. President Donald Trump and Chinese President Xi Jinping earlier this month.

In a post on Twitter following the call, Trump said he had a "very good" conversation with Xi with a "heavy emphasis on trade."

The FT said China subsequently responded to U.S. requests to address a range of sticking points, with senior U.S. and Chinese officials discussing the possibility of concessions.

One person familiar with the situation told the FT that U.S. Trade Representative Robert Lighthizer had told some industry executives the next round of tariffs on Chinese imports was already on hold.

The early weakness in the markets came amid lingering concerns about the global economic outlook as well as news of the resignation of U.K. Brexit Secretary Dominic Raab.

Traders were also digesting a slew of U.S. economic data, including reports on retail sales and weekly jobless claims.

Retail sales in the U.S. increased by more than anticipated in the month of October, the Commerce Department revealed in a report.

The Commerce Department said retail sales advanced by 0.8 percent in October following a revised 0.1 percent dip in September.

Economists had expected retail sales to climb by 0.5 percent compared to the 0.1 percent uptick originally reported for the previous month.

Excluding a jump in auto sales, retail sales still rose by 0.7 percent in October after edging down by 0.1 percent in September. Ex-auto sales had been expected to increase by 0.5 percent.

Meanwhile, closely watched core retail sales, which exclude automobiles, gasoline, building materials and food services, rose by 0.3 percent in October, matching the downwardly revise increase in September.

"The plunge in oil prices in recent weeks will boost households' real disposable incomes by close to $40 billion, with surging natural gas prices likely to offset only a small fraction of that improvement in purchasing power," said Michael Pearce, Senior U.S. Economist at Capital Economics.

"With consumer confidence still high, much of this extra cash is likely to filter through to spending on other goods and services," he added. "But we doubt that will be enough to replace the boost from the earlier fiscal stimulus or offset all of the headwind from tighter monetary policy."

A separate report from the Labor Department showed a slight increase in first-time claims for U.S. unemployment benefits in the week ended November 10th.

The report said initial jobless claims inched up to 216,000, an increase of 2,000 from the previous week's unrevised level of 214,000. Economists had expected jobless claims to edge down to 212,000.

The Labor Department also released a report showing import and export prices both rose by more than expected in the month of October.

The Labor Department said import prices climbed by 0.5 percent in October after rising by a downwardly revised 0.2 in September.

Economists had expected import prices to inch up by 0.1 percent compared to the 0.5 percent increase originally reported for the previous month.

The report also said export prices rose by 0.4 percent in October after coming in unchanged in September. Export prices had also been expected to tick up by 0.1 percent.

Reports released by the Federal Reserve Banks of New York and Philadelphia showed mixed readings on the pace of growth in regional manufacturing activity in the month of November.

Sector News

Semiconductor stocks moved sharply higher over the course of the session, driving the Philadelphia Semiconductor Index up by 3.3 percent.

Significant strength also emerged among biotechnology stocks, as reflected by the 2.9 percent jump by the NYSE Arca Biotechnology Index. The index rebounded after ending the previous session at a seven-month closing low.

Gold stocks extended yesterday's rally amid a continued increase by the price of the precious metal. With gold for December delivery rising $4.90 to $1,215 an ounce, the NYSE Arca Gold Bugs Index surged up by 2.1 percent.

Software, steel, networking and banking stocks also moved notably higher on the day, while considerable weakness remained visible among interest rate-sensitive utilities and housing stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. Japan's Nikkei 225 Index dipped by 0.2 percent, while Hong Kong's Hang Seng Index surged up by 1.8 percent.

Meanwhile, European stocks moved mostly lower, although the U.K's FTSE 100 Index bucked the downtrend and inched up by 0.1 percent. The French CAC 40 Index and the German DAX Index fell by 0.7 percent and 0.5 percent, respectively.

In the bond market, treasuries pulled back near the unchanged line after extending a recent uptrend early in the session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 3.118 percent.

Looking Ahead

Following today's avalanche of data, the economic calendar is relatively quiet on Friday, although traders are likely to keep an eye on the Federal Reserve's report on industrial production in October.

Trading may also be impacted by reaction to earnings news from Applied Materials (AMAT), Nordstrom (JWN), Nvidia (NVDA), and Williams-Sonoma (WSM), which are among the companies releasing their quarterly results after the close of today's trading.

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