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U.S. Stocks Reach Record Highs Ahead Of Trade Deal Signing

wallstreet nov02 15jan20 lt

With traders looking ahead to the signing of the U.S.-China phase one trade deal, stocks have moved mostly higher in morning trading on Wednesday. The major averages have all moved to the upside after ending the previous session mixed.

In recent trading, the major averages have reached new record intraday highs. The Dow is up 176.96 points or 0.6 percent at 29,116.63, the Nasdaq is up 47.05 points or 0.5 percent at 9,298.37 and the S&P 500 is up 14.08 points or 0.4 percent at 3,297.23.

The strength on Wall Street comes as President Donald Trump and Chinese Vice Premier Liu He are expected to sign the trade deal at a ceremony at the White House around 11:30 am ET.

The deal includes increased Chinese purchases of U.S. goods and is expected to open Chinese markets to more American companies.

In exchange, the U.S. will scrap a new round of tariffs and cut the tariffs on $120 billion worth of Chinese goods in half to 7.5 percent.

Traders seem to have shrugged off earlier jitters about indications that a 25 percent tariff on $250 billion worth of Chinese imports will remain in place until a phase two deal is completed.

The remaining tariffs could continue to hamper economic growth for the foreseeable future, with a phase two deal seen as potentially more difficult to complete.

On the U.S. economic front, a report released by the Labor Department showed a modest increase in U.S. producer prices in the month of December.

The Labor Department said its producer price index for final demand inched up by 0.1 percent in December after coming in unchanged in November. Economists had expected prices to rise by 0.2 percent.

Excluding food and energy prices, core producer prices still crept up by 0.1 percent in December after dipping by 0.2 percent in November. Core prices were also expected to increase by 0.2 percent.

A separate report from the New York Federal Reserve showed a modest acceleration in the pace of growth in regional manufacturing activity in the month of January.

The New York Fed said its general business conditions index edged up to 4.8 in January from a revised 3.3 in December, with a positive reading indicating growth in regional manufacturing activity.

Economists had expected the general business conditions index to come in unchanged compared to the 3.5 originally reported for the previous month.

Later in the day, the Federal Reserve is scheduled to release its Beige Book, a compilation of anecdotal evidence on economic conditions in the twelve Fed districts.

Utilities stocks are turning in a strong performance in morning trading, with the Dow Jones Utility Average climbing by 1.2 percent to a record intraday high.

Notable strength is also visible among pharmaceutical stocks, as reflected by the 1.2 percent gain being posted by the NYSE Arca Pharmaceutical Index.

On the other hand, energy stocks have come under pressure on the day, with a decrease by the price of crude oil weighing on the sector.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan's Nikkei 225 Index slid by 0.5 percent, while Hong Kong's Hang Seng Index fell by 0.4 percent.

Meanwhile, the major European markets have turned mixed on the day. While the U.K.'s FTSE 100 Index has inched up by 0.1 percent, the German DAX Index and the French CAC 40 Index are both down by 0.3 percent.

In the bond market, treasuries are extending the upward move seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2.3 basis points at 1.795 percent.

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