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Major Averages Recover From Early Weakness To Close Mixed - U.S. Commentary


After coming under pressure early in the session, stocks showed a significant recovery over the course of the trading day on Friday. The major averages climbed well off their worst levels of the day before ending the session mixed.

A late-day spike lifted the Nasdaq and the S&P 500 into positive territory, although the Dow still ended the day down 63.20 points or 0.3 percent at 25,106.33. The Nasdaq edged up 9.85 points or 0.1 percent to 7,298.20 and the S&P 500 inched up 1.83 points or 0.1 percent to 2,707.88.

Despite the mixed performance on the day, the major averages all moved higher for the week. The Nasdaq climbed by 0.5 percent, while the Dow rose by 0.2 percent and the S&P 500 crept up by less than a tenth of a percent.

The early weakness on Wall Street came amid lingering concerns about a potential trade deal between the U.S. and China.

Adding to the worries, a report from the Wall Street Journal said the U.S. and China don't even have a draft accord that specifies where they agree and disagree.

The report comes after President Donald Trump told reporters he will not meet with Chinese President Xi Jinping before a crucial March deadline.

"Not yet. Maybe. Probably too soon," Trump said when asked if he would meet with Xi in the next month or so before flatly saying, "No" when asked if the two leaders would meet before the deadline.

Tariffs on Chinese goods are currently set to jump automatically on the deadline, although Trump is expected to delay the increase as talks continue.

White House economic adviser Larry Kudlow told Fox Business on Thursday the U.S. and China have a "pretty sizable distance to go" before reaching a trade deal.

Overall trading activity was somewhat subdued, however, as a lack of major U.S. economic data kept some traders on the sidelines.

Sector News

Tobacco stocks showed a substantial move to the upside over the course of the session, driving the NYSE Arca Tobacco Index up by 4.8 percent. With the jump, the index ended the session at its best closing level in well over three months.

Significant strength also emerged among networking stocks, as reflected by the 2.9 percent spike by the NYSE Arca Networking Index.

Gold and telecom stocks have also moved notably higher as the day progressed, while considerable weakness remained visible among oil service stocks.

The Philadelphia Oil Service Index slumped by 1.5 percent even though the price of crude oil for March delivery inched up $0.08 to $57.72 a barrel.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Friday. Japan's Nikkei 225 Index plummeted by 2 percent, while Hong Kong's Hang Seng Index slipped by 0.2 percent.

The major European markets also moved to the downside on the day. While the German DAX Index slumped by 1 percent, the French CAC 40 Index fell by 0.5 percent and the U.K.'s FTSE 100 Index dipped by 0.3 percent.

In the bond market, treasuries extended the upward move seen over the course of the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, dipped 2 basis points to 2.632 percent.

Looking Ahead

The economic calendar remains relatively early next week, although reports on consumer and producer price inflation and industrial production are likely to attract attention as the week progresses.

Traders are also likely to keep an eye on earnings news from companies like Molson Coors (TAP), Under Armour (UAA), Groupon (GRPN), Cisco (CSCO), Yelp (YELP), Coca-Cola (KO), Nvidia (NVDA), Deere (DE), and PepsiCo (PEP).

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