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Stocks Climb Off Worst Levels But Remain Mostly Lower - U.S. Commentary


After coming under pressure earlier in the session, stocks have climbed off their worst levels of the day but remain mostly lower in mid-day trading on Thursday. The major averages are partly offsetting the substantial gains posted in the previous session.

Currently, the major averages are posting moderate losses. The Dow is down 76.23 points or 0.3 percent at 25,290.20, the Nasdaq is down 28.12 points or 0.4 percent at 7,263.47 and the S&P 500 is down 8.55 points or 0.3 percent at 2,735.24.

The early pullback on Wall Street came as some traders cashed 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.

Sector News

Computer hardware stocks continue to see considerable weakness in mid-day trading, resulting in a 1.9 percent slump by the NYSE Arca Computer Hardware Index.

Apple (AAPL) is posting a notable loss after Canaccord Genuity lowered its price target and earnings estimates for the tech giant amid concerns about iPhone demand.

Notable weakness also remains visible among financial stocks, with the NYSE Arca Broker/Dealer Index and the KBW Bank Index down by 1.4 percent and 1.1 percent, respectively.

Most of the other major sectors are showing only modest moves, however, as some traders stick to the sidelines ahead of this afternoon's release of the minutes of the latest Fed meeting.

Other Markets

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.

European stocks also moved to the upside on the day. The U.K.'s FTSE 100 Index and the French CAC 40 Index both advanced by 0.5 percent, but the German DAX Index bucked the uptrend and closed just below the unchanged line.

In the bond market, treasuries have pulled back off their best levels of the day but continue to see modest strength. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.6 basis points at 3.028 percent.

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