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U.S. Stocks Close Mixed After Another Choppy Trading Day

wallstreet3 13nov19 lt

Extending the lackluster performance seen over the past few sessions, stocks showed a lack of direction during trading on Wednesday. Despite the choppy trading, the Dow and the S&P 500 ended the session at new record closing highs.

The major averages bounced back and forth across the unchanged line before closing mixed. While the Nasdaq edged down 3.99 points or 0.1 percent to 8,482.10, the Dow rose 92.10 points or 0.3 percent to 27,783.59 and the S&P 500 inched up 2.20 points or 0.1 percent to 3,094.04.

Stocks saw initial weakness amid renewed uncertainty about a potential U.S.-China trade deal after President Donald Trump failed to offer many details about the trade talks in a speech on Tuesday.

In remarks at the Economic Club of New York, Trump claimed the Chinese are "dying to make a deal" and an agreement is "close," although investors had been hoping for more substantive comments.

Trump later denied that his trade war with China is hurting industry or causing uncertainty and threatened further increases in tariffs if a deal is not reached.

However, selling pressure waned as Federal Reserve Chairman Jerome Powell reiterated in Congressional testimony that the central bank is likely to leave interest rates unchanged in the near future.

Powell told members of the Joint Economic Committee that the Fed would leave rates at their current level unless there is a material change in the economic outlook.

Trump renewed his attacks on the Fed during his remarks on Tuesday, claiming the economy and the markets would be even stronger if the central bank would take his advice and slash interest rates further.

Stocks moved back to the downside in afternoon trading after a report from the Wall Street Journal said U.S.-China trade talks have hit a snag over Chinese purchases of U.S. agricultural products.

While Trump has said China agreed to buy up to $50 billion in agricultural products a year, people familiar with the matter told the Journal that China is leery of putting a numerical commitment in the text of a potential agreement.

In U.S. economic news, the Labor Department released a report showing consumer prices rose by slightly more than anticipated in the month of October.

The Labor Department said its consumer price index climbed by 0.4 percent in October after coming in unchanged in September. Economists had expected consumer prices to rise by 0.3 percent.

Excluding food and energy prices, core consumer prices edged up by 0.2 percent in October after a 0.1 percent uptick in September. The uptick in core prices matched economist estimates.

Sector News

Oil service stocks showed a significant move to the downside on the day, dragging the Philadelphia Oil Service Index down by 2.4 percent.

The weakness among oil service stocks came despite an increase by the price of crude oil, as crude for December delivery rose $0.32 to $57.12 a barrel.

Renewed uncertainty about a U.S.-China trade deal also contributed to considerable weakness among steel stocks, with the NYSE Arca Steel Index slumping by 2 percent.

On the other hand, interest rate-sensitive utilities showed a strong move to the upside on the day, driving the Dow Jones Utility Average up by 1.5 percent. The average continued to regain ground after ending Monday's session at its lowest closing level in almost three months.

Notable strength also emerged among gold stocks, as reflected by the 1.2 percent gain posted by the NYSE Arca Gold Bugs Index.

The strength among gold stocks came amid an increase by the price of the precious metal, with gold for December delivery climbing $9.60 to $1,463.30 an ounce.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan's Nikkei 225 Index slid by 0.9 percent, while Hong Kong's Hang Seng Index plunged by 1.8 percent.

The major European markets also moved to the downside on the day. While the German DAX Index fell by 0.4 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index both edged down by 0.2 percent.

In the bond market, treasuries extended the upward move seen over the course of the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3.9 basis points to 1.870 percent.

Looking Ahead

Powell is due to testify on Capitol Hill again on Thursday, although traders are likely to pay closer attention to news on the trade front.

Reports on weekly jobless claims and producer price inflation are also likely to be ignored in favor of the latest reports about the state of U.S.-China trade talks.

On the earnings front, Cisco Systems (CSCO), NetApp (NTAP), and Beazer Homes (BZH) are among the companies releasing their quarterly results after the close of today's trading.

Walmart (WMT) and Viacom (VIAB) are also among the companies due to report their results before the start of trading on Thursday.

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