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Stocks Give Back Ground After Initial Upward Move - U.S. Commentary


After initially moving to the upside, stocks have given back ground over the course of morning trading on Monday. The major averages have pulled back off their highs of the session, with the Dow dipping into negative territory.

Currently, the major averages are turning in a mixed performance. While the Dow is down 33.83 points or 0.1 percent at 25,072.50, the Nasdaq is up 12.65 points or 0.2 percent at 7,310.85 and the S&P 500 is up 0.49 points or less than a tenth of a percent at 2,708.37.

The initial strength on Wall Street partly reflected optimism about the next round of trade talks between the U.S. and China due to take place later this week.

Treasury Secretary Steven Mnuchin will lead the U.S. delegation to Beijing as the world's two largest economies seek to reach a trade deal before an early March deadline.

A report from Axios said President Donald Trump's advisers have informally discussed holding a summit with Chinese President Xi Jinping at Mar-a-Lago next month.

Two administration officials with direct knowledge of the internal discussions told Axios the meeting could come as soon as mid-March but stressed that nothing is set.

The report comes after Trump confirmed last week that he would not meet with Xi ahead of the deadline, when a jump in tariffs on Chinese goods is currently set to take effect.

Trump could delay the tariff increase if the talks between U.S. and Chinese officials continue to make progress toward a trade deal.

Early buying interest was somewhat subdued, as the uncertainty about trade made traders reluctant to make more significant moves.

A lack of major U.S. economic data has also kept traders on the sidelines, although reports on consumer and producer price inflation, import and export prices and industrial production are likely to attract attention in the coming days.

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

Tobacco stocks have come under considerable selling pressure, however, with the NYSE Arca Tobacco Index slumping by 1.6 percent. The index is pulling back off its best closing level in nearly three months.

Pharmaceutical and steel stocks are also seeing some weakness in morning trading, while strength is visible among transportation and biotechnology stocks.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Monday, with the Japanese markets closed for a holiday. China's Shanghai Composite Index surged up by 1.4 percent, while Australia's S&P/ASX 200 Index dipped by 0.2 percent.

Meanwhile, the major European markets have all moved to the upside on the day. While the French CAC 40 Index has jumped by 1.1 percent, the German DAX Index and the U.K.'s FTSE 100 Index are up by 0.9 percent and 0.8 percent, respectively.

In the bond market, treasuries are giving back ground after trending higher over the past few sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 2 basis points at 2.652 percent.

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