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U.S. Stocks Finish Volatile Session Modestly Higher

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Stocks saw considerable volatility over the course of the trading session on Thursday, with the major averages showing wild swings back and forth across the unchanged line before eventually ending the day in positive territory.

Following the pullback seen over the two previous sessions, the Dow inched up 3.12 points or less than a tenth of a percent to 27,222.97. The Nasdaq also rose 22.04 points or 0.3 percent to 8,207.24, while the S&P 500 climbed 10.69 points or 0.4 percent to 2,995.11.

The higher close on Wall Street came as comments from New York Federal Reserve President John Williams seemed to endorse a near-term interest rate cut by the Fed.

In remarks at the Central Bank Research Association's annual meeting in New York, Williams argued it "pays to act quickly to lower rates at the first sign of economic distress."

"My wife is a professor of nursing, and she says one of the best things you can do for your children is to get them vaccinated," Williams said. "It's better to deal with the short-term pain of a shot than to take the risk that they'll contract a disease later on."

"I think about monetary policy near the zero lower bound—or ZLB for short—in much the same way," he added. "It's better to take preventative measures than to wait for disaster to unfold."

Williams' comments come after the minutes of the latest Fed meeting noted several participants believed a near-term rate cut was appropriate from a risk-management perspective, as it could help cushion the effects of possible future adverse shocks to the economy.

Buying interest was somewhat subdued, however, as traders were also digesting news that the U.S. Navy has shot down an Iranian drone in the Strait of Hormuz.

President Donald Trump told reporters the USS Boxer took defensive action after the drone closed to within 1,000 yards of the amphibious assault ship and ignored multiple calls to stand down.

The downing of the Iranian drone comes a month after the Islamic Revolutionary Guards Corps shot down an unmanned U.S. surveillance drone.

Traders were also reacting to a mixed batch of earnings and economic news while also looking ahead to the release of quarterly results from software giant Microsoft (MSFT) after the close of today's trading.

Sector News

Gold stocks moved sharply higher over the course of the session, with the NYSE Arca Gold Bugs Index surging up by 3.2 percent to its best closing level in almost two years.

The rally by gold stocks came as the price of the precious metal soared in electronic trading on news of the U.S. Navy shooting down an Iranian drone.

Significant strength was also visible among tobacco stocks, as reflected by the 2.9 percent jump by the NYSE Arca Tobacco Index.

Philip Morris (PM) led the tobacco sector higher after reporting better than expected second quarter results and raising its full-year guidance.

Semiconductor, biotechnology, and transportation stocks also saw notable strength on the day, while weakness remained visible among retail stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved notably lower during trading on Thursday. Japan's Nikkei 225 Index plunged by 2 percent, while China's Shanghai Composite Index tumbled by 1 percent.

The major European markets also moved to the downside on the day. While the German DAX Index slumped by 0.9 percent, the U.K.'s FTSE 100 Index slid by 0.6 percent and the French CAC 40 Index fell by 0.4 percent.

In the bond market, treasuries moved to the upside late in the day after showing a lack of direction for much of the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, dipped 2.3 basis points to 2.038 percent.

Looking Ahead

In addition to Microsoft, Capital One (COF), Chewy (CHWY), E*Trade (ETFC), Intuitive Surgical (ISRG) and Skechers (SKX) are among the companies releasing their quarterly results after the close of today's trading.

American Express (AXP), BlackRock (BLK), Kansas City Southern (KSU), Schlumberger (SLB) and State Street (STT) are also among the companies due to report their results before the start of trading on Friday.

A preliminary report on consumer sentiment in July may also attract attention on Friday along with comments by St. Louis Fed President James Bullard, who voted to cut interest rates by 25 basis points at the last Fed meeting.

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