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Major Averages Holding On To Modest Gains In Mid-Day Trading - U.S. Commentary

wallstreet aug30 20feb19 lt

Modest strength remains visible on Wall Street in mid-day trading on Wednesday, with the major averages adding the slim gains posted in the previous session. The upward move on the day has lifted the tech-heavy Nasdaq to a three-month intraday high.

Currently, the major averages are hovering in positive territory. The Dow is up 29.71 points or 0.1 percent at 25,921.03, the Nasdaq is up 20.85 points or 0.3 percent at 7,507.62 and the S&P 500 is up 4.70 points or 0.2 percent at 2,784.46.

The markets continue to benefit from recent upward momentum, although buying interest remains subdued amid uncertainty about the latest round of trade talks between the U.S. and China.

Officials from the U.S. and China are meeting in Washington this week as the world's two largest economies attempt to reach a long-term trade deal.

The U.S. and China currently face an early March deadline to strike an agreement, although President Donald Trump has suggested the deadline could be postponed.

An editorial by state-run Chinese newspaper the Global Times warned the global stock markets could face a "catastrophic strike" if Trump raises tariffs on Chinese goods as currently planned.

"In terms of avoiding such blows, the Trump administration is probably the most pressured," the Global Times wrote. "Thus in general, by the end of the trade negotiations, China and the US have become more psychologically equal."

"Both sides have showed their strength and volition in the unprecedented trade war: The US didn't easily stop and China was not that fragile to be defeated," the paper added. "However, it has proven no empty talk that in a long-term trade war, both sides would eventually lose."

Trump has claimed China is under pressure to avoid an increase in tariffs, citing recent weakness in the Chinese economy and stock markets.

Traders are also looking ahead to this afternoon's release of the minutes of the Federal Reserve's monetary policy meeting held in late January.

The minutes may shed additional light on the Fed's shift toward a "patient" approach regarding future interest rate hikes.

Sector News

Tobacco stocks have moved sharply higher over the course of the trading session, extending the upward trend seen in recent sessions.

Reflecting the rally by tobacco stocks, the NYSE Arca Tobacco Index is surging up by 3.1 percent to its best intraday level in over three months.

Substantial strength has also emerged among gold stocks, as reflected by the 2.3 percent jump by the NYSE Arca Gold Bugs Index. The index has reached a seven-month intraday high.

A continued increase by the price of gold is contributing to the strength in the sector, with gold for April delivery rising $3.30 to $1,348.10 an ounce after spiking $22.70 to $1,344.80 an ounce on Tuesday.

Steel, oil service, and chemical stocks are also seeing considerable strength in mid-day trading, while some weakness remains visible among commercial real estate stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan's Nikkei 225 Index rose by 0.6 percent, while Hong Kong's Hang Seng Index jumped by 1 percent.

The major European markets also moved to the upside on the day. While the German DAX Index advanced by 0.8 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index both climbed by 0.7 percent.

In the bond market, treasuries have pulled back near the unchanged line after seeing initial strength. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by less than a basis point at 2.650 percent.

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