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U.S. Stocks Clinging To Modest Gains In Mid-Day Trading

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Buying interest appears somewhat subdued, although stocks continue to see modest strength in mid-day trading on Monday. With the uptick on the day, the major averages are adding to the strong gains posted last week.

Currently, the major averages are clinging to slim gains. The Dow is up 67.09 points or 0.3 percent at 26,864.55, the Nasdaq is up 4.87 points or 0.1 percent at 8,107.94 and the S&P 500 is up 3.40 points or 0.1 percent at 2,982.11.

The modest strength on Wall Street partly reflects optimism about further stimulus from global central banks, with the European Central Bank expected to cut interest rates at a meeting on Thursday.

Expectations for another interest rate by the U.S. Federal Reserve next week were also bolstered by last Friday's weaker than expected jobs data.

Data from China showing an unexpected drop in exports in August has also added to the hopes of more stimulus to stave off a global recession.

Official data showed Chinese exports in August unexpectedly fell by 1 percent compared to year ago, reflecting the ongoing trade dispute with the U.S.

Subsequently, the trade war also remains on investors' minds, although traders seem optimistic about high-level trade talks scheduled for next month.

Some political observers have suggested President Donald Trump may soften his stance on China in order to reach an agreement and prevent a U.S. recession just before Election Day.

Trading activity remains relatively light, however, with a lack of major U.S. economic data keeping some traders on the sidelines.

Reports on producer and consumer price inflation, retail sales and consumer sentiment are likely to attract attention in the coming days.

Sector News

After moving sharply higher early in the session, energy stocks have seen some further upside over the course of the trading day. The strength in the sector comes as the price of crude oil for October delivery is jumping $1.53 to $58.05 a barrel.

Reflecting the strength in the energy sector, the Philadelphia Oil Service Index and the NYSE Arca Natural Gas Index have surged up by 5.8 percent and 5.3 percent, respectively.

Significant strength also remains visible among banking stocks, as reflected by the 2.9 percent spike by the KBW Bank Index. Banking stocks are benefiting from the optimism about further global stimulus.

Steel, transportation and biotechnology stocks also continue to see considerable strength, while gold stocks have shown a substantial move to the downside.

The NYSE Arca Gold Bugs Index has tumbled by 3.4 percent, as the price of gold for December delivery is sliding $5.80 to $1,509.70 an ounce.

Pharmaceutical and software stocks are also seeing notable weakness in mid-day trading, limiting the upside for the broader markets.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Monday. Japan's Nikkei 225 Index climbed by 0.6 percent, while China's Shanghai Composite Index advanced by 0.8 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the German DAX Index rose by 0.3 percent, the French CAC 40 Index fell by 0.3 percent and the U.K.'s FTSE 100 Index slid by 0.6 percent.

In the bond market, treasuries have shown a notable move back to the downside after last Friday's rebound. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 6.8 basis points at 1.618 percent.

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