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U.S. Stocks Close Mixed As Early Buying Interest Fades

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After failing to sustain an early move to the upside, stocks gave back ground over the course of the trading session on Wednesday. The major averages pulled back well off their highs of the session before closing on opposite sides of the unchanged line.

While the tech-heavy Nasdaq rose 25.25 points or 0.3 percent to 7,909.97, the Dow edged down 11.40 points or less than a tenth of a percent to 26,536.82 and the S&P 500 closed lower for the fourth straight session, dipping 3.60 points or 0.1 percent to 2,913.78.

The early strength on Wall Street came as comments from Treasury Secretary Steven Mnuchin generated optimism about a potential U.S.-China trade deal.

Ahead of the highly anticipated G20 meeting between President Donald Trump and Chinese President Xi Jinping, Mnuchin told CNBC the U.S. and China had nearly completed a deal before talks broke down last month.

"We were about 90 percent of the way there and I think there's a path to complete this," Mnuchin said in an interview with CNBC's Hadley Gamble but did not shed any light on the sticking points to achieving the final 10 percent.

Mnuchin refused to speculate on whether a deal would be completed but said he was "hopeful," noting "President Trump and President Xi have a very close working relationship."

Buying interest waned over the course of the morning, however, as traders seemed reluctant to make more significant news as they waited for more concrete developments out of the talks.

The positive sentiment may also have been partly offset by a report from the Commerce Department unexpectedly showing another steep drop in durable goods orders in the month of May.

The Commerce Department said durable goods orders tumbled by 1.3 percent in May after plunging by 2.8 percent in April. The continued decrease surprised economists, who had expected durable goods orders to rise by 0.2 percent.

Meanwhile, excluding another nosedive in orders for transportation equipment, durable goods orders rose by 0.3 percent in May after edging down by 0.1 percent in April. Economists had expected a 0.1 percent uptick.

Sector News

Despite the lackluster close by the broader markets, substantial strength remained visible among semiconductor stocks. The Philadelphia Semiconductor Index surged up by 3.2 percent to its best closing level in well over a month.

Micron Technology (MU) led the sector higher after the chipmaker reported better than expected fiscal third quarter results and forecast a rebound in DRAM demand.

Energy stocks also saw significant strength on the day, benefiting from a sharp increase by the price of crude oil. Crude for August delivery spiked $1.55 to $59.38 a barrel following the release of a report showing a weekly nosedive in crude oil inventories.

Reflecting the strength in the energy sector, the Philadelphia Oil Service Index, the NYSE Arca Oil Index and the NYSE Arca Natural Gas Index all jumped by 2.1 percent.

On the other hand, interest rate sensitive utilities and commercial real estate stocks came under pressure amid concerns a rate cut by the Federal Reserve may not be as imminent as hoped.

Tobacco stocks also showed a particularly steep drop on the day following the rally seen over the course of the previous session.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan's Nikkei 225 Index fell by 0.5 percent, while China's Shanghai Composite Index edged down by 0.2 percent.

Meanwhile, the major European markets turned mixed over the course of the session. While the German DAX Index inched up by 0.1, the U.K.'s FTSE 100 Index edged down by 0.1 percent and the French CAC 40 Index fell by 0.3 percent.

In the bond market, treasuries gave back ground after moving notably higher over the two previous sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 5.5 basis points to 2.049 percent.

Looking Ahead

Reports on first quarter GDP, weekly jobless claims, and pending home sales may attract some attention on Thursday, although trading activity is likely to be somewhat subdued ahead of the start of the G20 summit on Friday.

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