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U.S. Stocks Showing A Lack Of Direction In Morning Trading

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Following the lackluster performance seen for much of the previous session, stocks have continued to fluctuate in morning trading on Wednesday. The major averages have spent the morning bouncing back and forth across the unchanged line.

Currently, the major averages are posting modest losses. The Dow is down 17.39 points or 0.1 percent at 26,031.12, the Nasdaq is down 32.30 points or 0.4 percent at 7,790.26 and the S&P 500 is down 4.19 points or 0.2 percent at 2,881.53.

The choppy trading on Wall Street comes as traders weigh lingering trade concerns against optimism about an interest rate cut by the Federal Reserve.

The U.S.-China trade conflict largely took a back seat to President Donald Trump's threatened tariffs on Mexico but has moved back into the spotlight ahead of the G20 summit later this month.

In remarks to reporters on Tuesday, Trump suggested he has "no interest" in negotiating unless China agrees to come back to the table to discuss previous terms of a deal he has claimed was nearly complete.

Trump said he expects to meet with Chinese President Xi Jinping at the G20 summit and has warned that he will impose new tariffs on Chinese goods if his counterpart does not attend.

Partly offsetting the negative sentiment about trade, another report showing tame inflation has further fueled expectations that the Federal Reserve will cut interest rates in the near future.

The Labor Department said its consumer price index inched up by 0.1 percent in May after rising by 0.3 percent in April. The uptick in prices matched economist estimates.

Excluding food and energy prices, core consumer prices also edged up by 0.1 percent for the fourth consecutive month. Economists had expected core prices to rise by 0.2 percent.

The report also showed a slowdown in the annual rate of consumer price growth, with the headline index up by 1.8 percent year-over-year in May compared to the 2.0 percent increase in April.

The annual rate of core consumer price growth also slowed to 2.0 percent in May from 2.1 percent in the previous month.

"Tariff changes may eventually push up some goods prices, while apparel prices should soon rebound," said ING Chief International Economist James Knightley. "But for now, inflation pressures in aggregate remain benign."

He added, "As such, financial markets will see little reason for the Federal Reserve to hold back from rate cuts in coming months to combat the perceived threat of a slowdown caused by intensifying trade tensions."

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

Energy stocks are seeing substantial weakness, however, with a steep drop by the price of crude oil weighing on the sector. Crude for July delivery is tumbling $1.13 to $52.14 a barrel.

Reflecting the weakness in the energy sector, the Philadelphia Semiconductor Index is down by 2.7 percent, the NYSE Arca Natural Gas Index is down by 1.9 percent and the NYSE Arca Oil Index is down by 1 percent.

Semiconductor and brokerage stocks are also seeing notable weakness, while significant strength is visible among gold and utilities stocks.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan's Nikkei 225 Index fell by 0.4 percent, while Hong Kong's Hang Seng Index plunged by 1.7 percent amid ongoing protests over a proposed extradition bill.

The major European markets are also giving back ground after trending higher in recent sessions. While the German DAX Index has dipped by 0.3 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index are both down by 0.5 percent.

In the bond market, treasuries are seeing modest strength after ending the previous session roughly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.1 basis points at 2.129 percent.

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