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Stocks Pulling Back As Traders Cash In On Yesterday's Rally - U.S. Commentary


Stocks have moved moderately lower in morning trading on Thursday, giving back ground following the rally seen in the previous session. The major averages have all slid firmly into negative territory but remain sharply higher for the week.

In recent trading, the major averages have seen further downside, hitting new lows for the session. The Dow is down 120.64 points or 0.5 percent at 25,245.79, the Nasdaq is down 49.72 points or 0.7 percent at 7,241.87 and the S&P 500 is down 15.20 points or 0.6 percent at 2,728.59.

The pullback on Wall Street comes as some traders are cashing on yesterday's gains, which came on the heels of "dovish" comments from Federal Reserve Chairman Jerome Powell.

Powell told the Economic Club of New York interest rates are currently "just below" neutral, although some economists have suggested the subsequent rally by stocks was overdone.

Lingering uncertainty about trade between the U.S. and China is also weighing on the markets ahead of this weekend's meeting between President Donald Trump and Chinese President Xi Jinping.

Trump and Xi are due to hold a dinner meeting on Saturday on the sidelines of the G20 summit in Buenos Aires, Argentina, although a substantive breakthrough is seen as unlikely.

Negative sentiment may also have been generated by a report from the National Association of Realtors unexpectedly showing a substantial decrease in pending home sales in the month of October.

NAR said its pending home sales index plunged by 2.6 percent to 102.1 in October after climbing by 0.7 percent to an upwardly revised 104.8 in September. With the steep drop, the index fell to its lowest level since mid-2014.

The sharp pullback surprised economists, who had expected pending home sales to rise by 0.5 percent, matching the increase originally reported for the previous month.

A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

The Labor Department also released a report showing initial jobless claims unexpectedly rose to a six-month high in the week ended November 24th.

The report said initial jobless claims climbed to 234,000, an increase of 10,000 from the previous week's unrevised level of 224,000. Economists had expected jobless claims to edge down to 220,000.

With another unexpected increase, jobless claims reached their highest level since hitting a matching figure in the week ended May 19th.

Meanwhile, a separate report from the Commerce Department showed personal income and spending both increased by more than anticipated in the month of October.

The Commerce Department said personal income climbed by 0.5 percent in October after edging up by 0.2 percent in September. Economists had expected income to rise by 0.4 percent.

Additionally, the report said personal spending advanced by 0.6 percent in October after rising by 0.2 percent in the previous month. Spending had also been expected to increase by 0.4 percent.

Computer hardware stocks have shown a substantial move to the downside in morning trading, dragging the NYSE Arca Computer Hardware Index down by 2.1 percent.

Tech giant Apple (AAPL) is posting a notable loss after Canaccord Genuity lowered its price target for the company's stock amid concerns about iPhone demand.

Financial, tobacco, and steel stocks have also shown notable omves to the downside on the day, while most of the other major sectors are showing more modest moves.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Thursday, although Chinese stocks bucked the uptrend. Japan's Nikkei 225 Index rose by 0.4 percent, while Australia's S&P/ASX 200 Index climbed by 0.6 percent.

The major European markets have also moved to the upside on the day. While the German DAX Index has inched up by 0.1 percent, the French CAC 40 Index is up by 0.7 percent and the U.K.'s FTSE 100 Index is up by 0.8 percent.

In the bond market, treasuries are extending the upward move seen over the course of the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3.2 basis points at 3.012 percent.

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