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Stocks Move Mostly Higher On Optimism About Trade Talks - U.S. Commentary


Stocks have moved mostly higher in morning trading on Friday following the mixed performance seen in the previous session. The major averages have all moved to the upside after ending Thursday's trading on opposite sides of the unchanged line.

Currently, the major averages remain firmly positive, with the Dow outperforming its counterparts. The Dow is up 332.57 points or 1.3 percent at 25,771.96, the Nasdaq is up 35.48 points or 0.5 percent at 7,462.44 and the S&P 500 is up 23.72 points or 0.9 percent at 2,769.45.

The strength on Wall Street partly reflects continued optimism about trade talks between the U.S. and China, the world's two largest economies.

A statement from the White House said high level U.S.-China trade talks this week led to "progress between the two parties" but noted "much work remains."

The White House said the U.S. hopes to see additional progress as discussions at the ministerial and vice-ministerial levels continue in Washington next week.

Traders have also reacted positively to news that both the House and Senate passed legislation to avoid another government shutdown.

President Donald Trump plans to sign the legislation but will also declare a national emergency in order to gain additional funding for construction of his controversial border wall.

The national emergency declaration is likely to face immediate legal challenges, however, with some lawmakers warning about the dangerous precedent set by the move.

Additional buying interest was generated by preliminary data from the University of Michigan showed a bigger than expected rebound in consumer sentiment in the month of February.

The report said the consumer sentiment index climbed to 95.5 in February after tumbling to 91.2 in January. Economists had expected the index to rise to 93.0.

Surveys of Consumers chief economist Richard Curtin said the rebound in consumer sentiment reflected the end of the partial government shutdown as well as a more fundamental shift in consumer expectations due to the Federal Reserve's pause in raising interest rates.

Meanwhile, traders have largely shrugged off a report from the Federal Reserve showing an unexpected decrease in industrial production in January.

The Fed said industrial production fell by 0.6 percent in January after inching up by a downwardly revised 0.1 percent in December.

Economists had expected production to tick up by 0.1 percent compared to the 0.3 percent increase originally reported for the previous month.

The unexpected drop in industrial production came as manufacturing output slumped by 0.9 percent in January after climbing by 0.8 percent in December.

Tobacco stocks have shown a substantial move to the upside in morning trading, driving the NYSE Arca Tobacco Index up by 2.6 percent. The index has surged up to a three-month intraday high.

Considerable strength has also emerged among oil service stocks, as reflected by the 2.3 percent jump by the Philadelphia Oil Service Index. The strength in the sector comes as the price of crude for March delivery is climbing $0.88 to $55.29 a barrel.

Financial, natural gas, and chemical stocks are also seeing notable strength, moving higher along with most of the other major sectors.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Friday. Japan's Nikkei 225 Index slumped by 1.1 percent, while Hong Kong's Hang Seng Index plunged by 1.9 percent.

Meanwhile, the major European markets have shown strong moves to the upside on the day. While the U.K.'s FTSE 100 Index has advanced by 0.7 percent, the French CAC 40 Index and the German DAX Index are both spiking by 1.8 percent.

In the bond market, treasuries are giving back ground following the notable upward move seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 1.3 basis points at 2.670 percent.

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