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U.S. Stocks Move Mostly Higher Amid Rebound In Bond Yields


Following the lackluster performance seen in the previous session, stocks have shown a notable move to the upside in morning trading on Friday. The major averages have all climbed firmly into positive territory after ending Thursday's trading mixed.

In recent trading, the major averages have reached new highs for the session. The Dow is up 207.89 points or 0.8 percent at 25,787.28, the Nasdaq is up 91.84 points or 1.2 percent at 7,858.46 and the S&P 500 is up 28.82 points or 1 percent at 2,876.42.

The early strength on Wall Street may reflect optimism about the world's central banks providing aggressive stimulus in order to prevent a global recession.

European Central Bank official Olli Rehn helped spark confidence after expressing the need for a significant easing package in September to support the flagging eurozone economy.

The expectations for more stimulus have contributed to a pullback by U.S. treasuries and a subsequent increase in bond yields.

The yield on the benchmark ten-year note dropped below the two-year yield on Wednesday, sparking fears of an impending recession and a sell-off on Wall Street.

Meanwhile, traders have largely shrugged off a report from the University of Michigan showing a significant deterioration in U.S. consumer sentiment in August.

The report said the consumer sentiment index tumbled to 92.1 in August after inching up to 98.4 in July. Economists had expected the index to dip to 97.2.

With the much steeper than expected drop, the consumer sentiment index slumped to its lowest level since hitting 91.2 in January.

The deterioration in consumer sentiment came amid concerns about the proposed increase in tariffs on Chinese imports as well as the reasoning behind the Federal Reserve's interest rate cut.

"The main takeaway for consumers from the first cut in interest rates in a decade was to increase apprehensions about a possible recession," said Surveys of Consumers chief economist Richard Curtin.

He added, "Consumers concluded, following the Fed's lead, that they may need to reduce spending in anticipation of a potential recession."

Curtin said consumers are likely to reduce their pace of spending but still help keep the economy out of recession at least through mid-2020.

A separate report from the Commerce Department showed an unexpected slump in housing starts in July but a sharper than expected increase in building permits.

The report said housing starts tumbled by 4.0 percent to an annual rate of 1.191 million from the revised June estimate of 1.241 million.

The drop surprised economists, who had expected housing starts to edge up by 0.3 percent to a rate of 1.257 million from the 1.253 million originally reported for the previous month.

Meanwhile, the Commerce Department said building permits spiked by 8.4 percent to a rate of 1.336 million in July from a revised 1.232 million in June.

Building permits, an indicator of future housing demand, had been expected to jump by 4.1 percent to 1.270 million from the 1.220 million originally reported for the previous month.

Semiconductor stocks have shown a significant move to the upside in morning trading, driving the Philadelphia Semiconductor Index up by 2.1 percent.

Graphics chipmaker Nvidia (NVDA) is leading the sector higher after reporting second quarter results that exceeded analyst estimates on both the top and bottom lines.

Considerable strength has also emerged among biotechnology stocks, with the NYSE Arca Biotechnology Index jumping by 1.7 percent after ending Thursday's trading at its lowest closing level in over two months.

Computer hardware, banking, and oil service stocks are also seeing notable strength, moving higher along with most of the other major sectors.

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Friday. Japan's Nikkei 225 Index inched up by 0.1 percent, while South Korea's Kospi slid by 0.6 percent.

Meanwhile, the major European markets have all moved to the upside on the day. While the U.K.'s FTSE 100 Index has risen by 0.4 percent, the German DAX Index and the French CAC 40 Index are both up by 0.8 percent.

In the bond market, treasuries are giving back ground after moving significantly higher over the past several sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 3 basis points at 1.559 percent.

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