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Major Averages Turn Mixed After Seeing Initial Strength - U.S. Commentary


After an initial move to the upside, stocks have fluctuated over the course of morning trading on Friday. The Dow has pulled back well off its highs and into the red, although the Nasdaq and the S&P 500 remain in positive territory.

Currently, the major averages are turning in a mixed performance. While the Dow is down 14.12 points or 0.1 percent at 25,965.82, the Nasdaq is up 50.41 points or 0.7 percent at 7,681.32 and the S&P 500 is up 7.59 points or 0.3 percent at 2,816.07.

The initial strength on Wall Street came amid optimism about U.S.-China trade talks as well as indications of more Chinese economic stimulus.

Chinese Premier Li Keqiang pledged support for the slowing economy during his annual news conference at the end of the National People's Congress.

Li said the country could use reserve requirements and interest rates to prevent a sharper deceleration in the world's second-largest economy.

However, the positive sentiment was partly offset by a report from the Federal Reserve showing industrial production rose by much less than expected in the month of February.

The Fed said industrial production inched up by 0.1 percent in February after falling by a revised 0.4 percent in January.

Economists had expected production to climb by 0.4 percent compared to the 0.6 percent drop originally reported for the previous month.

The uptick in production came as a spike in utilities output and an increase in mining output was largely offset by a continued drop in manufacturing output.

"The further decline in manufacturing output in February confirms that the global industrial slowdown is now weighing more heavily on U.S. producers," said Andrew Hunter, Senior U.S. Economist at Capital Economics.

He added, "With tighter fiscal and monetary policy constraining domestic demand, the weaker external environment is another reason to expect a sustained slowdown in economic growth this year."

A separate report from the New York Fed showed an unexpected slowdown in regional manufacturing growth, although the University of Michigan also released a report showing a bigger than expected improvement in consumer sentiment in March.

Semiconductor stocks have shown a substantial move to the upside in morning trading, driving the Philadelphia Semiconductor Index up by 3.2 percent. The index has jumped to its best intraday level in six months.

Broadcom (AVGO) is leading the sector higher after the chipmaker reported fiscal first quarter earnings that exceeded analyst estimates.

Gold stocks are also seeing considerable strength amid a rebound by the price of the precious metal, moving notably higher along with computer hardware, networking and steel stocks.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan's Nikkei 225 Index advanced by 0.8 percent, while China's Shanghai Composite Index jumped by 1 percent.

The major European markets have also moved to the upside on the day. While the U.K.'s FTSE 100 Index has climbed by 0.5 percent, the French CAC 40 Index and the German DAX Index are up by 0.6 percent and 0.7 percent, respectively.

In the bond market, treasuries have climbed firmly into positive territory on the mostly disappointing economic data. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 4.8 basis points at 2.582 percent.

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