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U.S. Stocks Regain Ground Amid Optimism About Rate Cut

wallstreet oct30 13jun19 lt

Following the modest pullback seen over the two previous sessions, stocks moved back to the upside during trading on Thursday. Buying interest was somewhat subdued, although the major averages all ended the day in positive territory.

The major averages jumped going into the close of trading but remained off their highs of the session. The Dow rose 101.94 points or 0.4 percent to 26,106.77, the Nasdaq advanced 44.41 points or 0.6 percent to 7,837.13 and the S&P 500 climbed 11.80 points or 0.4 percent to 2,891.64.

Continued optimism tame inflation will lead the Federal Reserve to cut interest rates contributed to the strength on Wall Street after a Labor Department report showed bigger than expected decreases in U.S. import and export prices.

The Labor Department said import prices fell by 0.3 percent in May following a revised 0.1 percent uptick in April.

Economists had expected import prices to dip by 0.2 percent compared to the 0.2 percent increase originally reported for the previous month.

Additionally, the report said export prices edged down by 0.2 percent in May after inching up by a revised 0.1 percent in April.

Export prices had been expected to slip by 0.1 percent compared to the 0.2 percent growth originally reported for the previous month.

With the bigger than expected monthly decreases, import and export prices both showed their biggest annual declines in over two years.

Meanwhile, a separate report from the Labor Department said first-time claims for U.S. unemployment benefits unexpectedly edged higher in the week ended June 8th.

The report said initial jobless claims inched up to 222,000, an increase of 3,000 from the previous week's revised level of 219,000.

The uptick came as a surprise to economists, who had expected jobless claims to edge down to 216,000 from the 218,000 originally reported for the previous week.

Sector News

Oil service stocks moved sharply higher on the day following the sell-off seen in the previous session. After plummeting by 5.1 percent on Wednesday, the Philadelphia Oil Service Index surged up by 3.7 percent.

A rebound by the price of crude oil helped the sector bounce back, with crude for July delivery jumping $1.14 to $52.28 a barrel after plunging $2.13 to $51.14 a barrel in the previous session.

The price of crude oil rebounded on reports of a possible terrorist attack on oil tankers in the Gulf of Oman near the Iranian coastline.

Considerable strength also emerged among gold stocks, as reflected by the 1.7 percent gain posted by the NYSE Arca Gold Bugs Index. The strength in the sector came as the price of gold for August delivery climbed $6.90 to $1,343.70 an ounce.

Natural gas, steel, and transportation stocks also saw notable strength on the day, moving higher along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan's Nikkei 225 Index fell by 0.5 percent, while Hong Kong's Hang Seng Index edged down by 0.1 percent.

Meanwhile, European stocks saw modest strength on the day. While the German DAX Index rose by 0.4 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index both closed just above the unchanged line.

In the bond market, treasuries moved higher on above average demand for a thirty-year bond auction. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3.6 basis points to 2.091 percent.

Looking Ahead

Another batch of U.S. economic data may impact trading on Friday, with traders likely to keep a close eye on reports on retail sales, industrial production, and consumer sentiment.

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