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Dow, S&P 500 Extending Upward Trend, Nasdaq Posting Modest Loss

wallstreet aug20 11aug20 lt

After closing mixed for two consecutive sessions, the major U.S. stock averages have once again moved in opposite directions during trading on Tuesday. The Dow and the S&P 500 are extending their recent upward move, while the Nasdaq is pulling back further off last Thursday's record highs.

Currently, the Dow is up 325.57 points or 1.2 percent at 28,117.01 and the S&P 500 is up 15.12 points or 0.5 percent at 3,375.59, closing in on its record highs. Meanwhile, the Nasdaq is down 22.42 points or 0.2 percent at 10,945.94.

The continued advance by the Dow and the S&P 500 comes following news that Russia has approved a coronavirus vaccine, with Russian President Vladimir Putin claiming the vaccine works "quite effectively."

"It forms a stable immunity and, I repeat, has passed all the necessary checks," Putin said at a meeting with members of the government, according to RIA Novosti.

The speed of the development of the vaccine has raised questions about its safety, although the news is still likely to generate optimism the coronavirus pandemic can be contained in the relatively near future.

The optimism about a potential vaccine has led to traders to cycle into stocks like airlines and cruise operators and out of technology stocks, contributing to the drop by the tech-heavy Nasdaq.

In U.S. economic news, the Labor Department released a report showing producer prices climbed by more than expected in the month of July.

The Labor Department said its producer price index for final demand rose by 0.6 percent in July after dipping by 0.2 percent in June.

The rebound in producer prices reflected the largest increase since October of 2018 and exceeded economist estimates for an uptick of 0.3 percent.

Excluding food and energy prices, core producer prices still climbed by 0.5 percent in July after falling by 0.3 percent in June. Economists had expected core prices to inch up by 0.1 percent.

Banking stocks are turning in some of the market's best performances in morning trading, driving the KBW Bank Index up by 4.5 percent to its best intraday level in nearly two months.

Substantial strength has also emerged among airline stocks, as reflected by the 4.3 percent spike by the NYSE Arca Airline Index. The index also reached a nearly two-month intraday high in early trading.

Oil service stocks have also moved sharply higher amid an increase by the price of crude oil, with the Philadelphia Oil Service Index jumping by 3.7 percent. Crude for September delivery is rising $0.39 to $42.33 a barrel.

Brokerage, tobacco, and chemical stocks are also seeing considerable strength on the day, moving higher along with most of the other major sectors.

On the other hand, gold stocks are bucking the uptrend amid a steep drop by the price of the precious metal. With gold for December delivery plummeting $76.60 to $1,963.10 an ounce, the NYSE Arca Gold Bugs Index has plunged by 5.5 percent.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Tuesday, although China's Shanghai Composite Index bucked the uptrend and slumped by 1.2 percent. Japan's Nikkei 225 Index jumped by 1.9 percent, while Hong Kong's Hang Seng Index surged up by 2.1 percent.

The major European markets have also shown strong moves to the upside on the day. While the French CAC 40 Index has soared by 2.3 percent, the German DAX Index is up by 1.8 percent and the U.K.'s FTSE 100 Index is up by 1.4 percent.

In the bond market, treasuries have moved significantly lower over the course of the morning. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 7.1 basis points at 0.645 percent.

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