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U.S. Stocks Close Modestly Higher But Well Off Best Levels

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Following the sell-off seen in the previous session, stocks regained some ground early in the trading day on Friday. However, the major averages were unable to sustain the initial upward move and pulled back well off their highs over the course session.

The major averages still managed to end the day modestly higher. The Dow rose 95.22 points or 0.4 percent to 25,585.69, the Nasdaq edged up 8.72 points or 0.1 percent to 7,637.01 and the S&P 500 inched up 3.82 points or 0.1 percent to 2,826.06.

Even with the uptick on the day, the major averages moved notably lower for the week. While the Nasdaq plunged by 2.3 percent, the S&P 500 tumbled by 1.2 percent and the Dow slid by 0.7 percent.

Bargain hunting contributed to the early strength on Wall Street as some traders looked to pick up stocks at reduced levels following Thursday's steep losses.

The markets also benefited from easing trade concerns as President Donald Trump said he remains hopeful of a U.S.-China trade deal, noting he will meet with Chinese President Xi Jinping at the G20 summit next month.

"And I think things, probably, are going to happen with China fast because I can't imagine that they can be thrilled with thousands of companies leaving their shores for other places," Trump said in remarks to farmers impacted by the escalating trade dispute.

Buying interest waned shortly after the start of trading, however, as traders seemed reluctant to make significant moves ahead of the long Memorial Day weekend.

The subsequent pullback by stocks was partly due to news that J.P. Morgan economists slashed their second quarter GDP growth forecast to 1 percent from 2.25 percent.

The substantially lower growth forecast by J.P. Morgan came after a Commerce Department report said durable goods orders tumbled by 2.1 percent in April after jumping by a downwardly revised 1.7 percent in March.

The Commerce Department also said orders for non-defense capital goods excluding aircraft, an indicator of business spending, slumped by 0.9 percent in April after rising by 0.3 percent in March.

Shipments in the same category were unchanged in April following a downwardly revised 0.6 percent drop in the previous month.

"The April durable goods report was bad, particularly the details relating to capital goods orders and shipments," the J.P. Morgan economists wrote.

They added, "Coming on the heels of last week's crummy April retail sales report, it suggests second quarter activity growth is sharply downshifting from the first quarter pace."

Sector News

Housing stocks showed a strong move to the upside over the course of the session, with the Philadelphia Housing Sector Index climbing by 1.1 percent after ending the previous session at its lowest closing level in well over a month.

Financial, telecom, and biotechnology stocks also saw notable strength on the day, moving higher along with most of the other major sectors.

On the other hand, oil service stocks came under pressure as the day progressed, dragging the Philadelphia Oil Service Index down by 1.5 percent to a five-month closing low.

The weakness among oil service stocks came despite an increase by the price of crude oil, as crude for July delivery rose $0.72 to $58.63 a barrel after plunging $3.51 a barrel on Thursday.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Friday. Japan's Nikkei 225 Index dipped by 0.2 percent, while Hong Kong's Hang Seng Index rose by 0.3 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the German DAX Index rose by 0.5 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index both advanced by 0.7 percent.

In the bond market, treasuries gave back ground after moving sharply higher in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.8 basis points to 2.324 percent.

Looking Ahead

Following the holiday weekend, reports on consumer confidence, pending home sales, and personal income and spending may attract attention next week.

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