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U.S. Stocks Rebounding On Upbeat Report About Trade Talks

wallstreet oct15 04dec19 lt

Stocks have moved mostly higher in morning trading on Wednesday, regaining some ground following the pullback seen over the three previous sessions. The major averages have all moved to the upside but remain well off their record highs.

Currently, the major averages are hovering firmly in positive territory. The Dow is up 197.17 points or 0.7 percent at 27,699.98, the Nasdaq is up 53.93 points or 0.6 percent at 8,574.58 and the S&P 500 is up 23.14 points or 0.8 percent at 3,116.34.

The rebound on Wall Street comes after a report from Bloomberg News indicated the U.S. and China are moving closer to agreeing on the amount of tariffs that would be rolled back in a phase one trade deal.

Citing people familiar with the talks, Bloomberg said U.S. negotiators expect a phase one deal to be completed before U.S. tariffs are set to rise on December 15.

The people told Bloomberg outstanding issues in the talks include how to guarantee China's purchases of U.S. agricultural goods and exactly which tariffs to roll back.

Bloomberg said the people downplayed President Donald Trump's recent remarks suggesting he would like to delay completing an agreement until after the 2020 elections, noting the president was speaking off the cuff.

Renewed optimism about a potential trade deal has helped offset any negative sentiment generated by some disappointing economic data, including a report from payroll processor ADP showing much weaker than expected private sector job growth in the month of November.

ADP said private sector employment rose by 67,000 jobs in November after climbing by a revised 121,000 jobs in October.

Economists had expected employment to jump by 140,000 jobs compared to the addition of 125,000 jobs originally reported for the previous month.

"The job market is losing its shine," said Mark Zandi, chief economist of Moody's Analytics. "Job openings are declining and if job growth slows any further unemployment will increase."

A separate report released by the Institute for Supply Management showed the pace of growth in U.S. service sector activity slowed by more than anticipated in the month of November.

The ISM said its non-manufacturing index dipped to 53.9 in November after climbing to 54.7 in October. While a reading above 50 still indicates service sector growth, economists had expected the index to edge down to 54.5.

Energy stocks have moved sharply higher on the day, as the price of crude oil has soared following the release of a report showing a steep weekly drop in crude oil inventories.

Crude for January delivery is spiking $2.15 to $58.25 a barrel after the Energy Information Administration said crude oil inventories plunged by 4.9 million barrels in the week ended November 29th.

Reflecting the strength in the energy sector, the Philadelphia Oil Service Index and the NYSE Arca Natural Gas Index have surged up by 3.7 percent and 3.4 percent, respectively. The NYSE Arca Oil Index has also jumped by 1.8 percent.

Semiconductor, steel, and transportation stocks are also seeing considerable strength after turning in some of the market's worst performances in the previous session.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan's Nikkei 225 Index slumped by 1.1 percent, while Hong Kong's Hang Seng Index plunged by 1.3 percent.

Meanwhile, European stocks have moved mostly higher on the day. While the U.K.'s FTSE 100 Index has edged up by 0.2 percent. The German DAX Index and the French CAC 40 Index have jumped by 1.1 percent and 1.3 percent, respectively.

In the bond market, treasuries are giving back ground following the rally seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 6.7 basis points at 1.776 percent.

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