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U.S. Stocks Continue To Recover From Last Wednesday's Sell-Off


Stocks moved significantly higher over the course of the trading session on Monday, continuing to offset the sell-off seen last Wednesday. With the upward move, the Dow and the S&P 500 climbed further off last week's two-month lows.

The major averages gave back some ground going into the close but remained firmly positive. The Dow surged up 249.78 points or 1 percent to 26,135.79, the Nasdaq soared 106.82 points or 1.4 percent to 8,002.81 and the S&P 500 jumped 34.97 points or 1.2 percent to 2,923.65.

The strength on Wall Street came amid a continued rebound in bond yields on optimism about new global stimulus.

The People's Bank of China said it would use market-based reform methods to help lower real lending rates and prop up a slowing economy.

News that President Donald Trump's administration is once again delaying restrictions on Chinese tech giant Huawei also generated buying interest

Commerce Secretary Wilbur Ross revealed the news in an appearance on the Fox Business Network, announcing a "temporary general license" set to expire on Monday will be extended for another 90 days.

The move will allow Huawei to continue purchasing supplies from U.S. companies despite being placed on an economic blacklist back in May.

"There is another 90 days for the U.S. telecom companies, some of the rural companies are dependent on wild ways," Ross said. "So we're giving them a little more time to wean themselves off. But there are no specific licenses being granted for anything."

The continued rebound on Wall Street also came after Trump's economic advisers took to the Sunday talk shows to downplay concerns about a possible recession.

Trump himself told reporters that he does not foresee an economic downturn even after last week's yield curve inversion, which is widely seen as an early recession indicator.

"I don't think we're having a recession," Trump said. "We're doing tremendously well. Our consumers are rich. I gave a tremendous tax cut and they're loaded up with money."

Sector News

Oil service stocks turned some of the market's best performances on the day, extending the rebound seen in the previous session.

Reflecting the continued strength in the sector, the Philadelphia Oil Service Index spiked by 4.4 percent, climbing further off last Thursday's eighteen-year closing low.

The rally by oil service stocks comes amid a sharp increase by the price of crude oil, with crude for September delivery surged up $1.34 to $56.21 a barrel.

Significant strength was also visible among natural gas stocks, as reflected by the 3.6 percent jump by the NYSE Arca Natural Gas Index.

The news about the reprieve for Huawei also contributed to considerable strength among semiconductor stocks, driving the Philadelphia Semiconductor Index up 1.9 percent.

Networking, computer hardware and retail 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 higher during trading on Monday. Japan's Nikkei 225 Index advanced by 0.7 percent, while China's Shanghai Composite Index surged up by 2.1 percent.

The major European markets also showed strong moves to the upside on the day. While the U.K.'s FTSE 100 Index jumped by 1 percent, the French CAC 40 Index and the German DAX Index both shot up by 1.3 percent.

In the bond market, treasuries moved notably lower, extending the modest pullback seen last Friday. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 5.9 basis points to 1.598 percent.

Looking Ahead

Earnings news may attract attention amid another quiet day on the U.S. economic front on Tuesday, with retailers Home Depot (HD), Kohl's (KSS), and TJX (TJX) among the companies releasing their quarterly results before the start of trading.

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