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Major Averages Close Mixed Following Lackluster Session - U.S. Commentary


After ending the previous session mostly higher, stocks showed a lack of direction throughout much of the trading session on Thursday. The major averages spent the day bouncing back and forth across the unchanged line.

Eventually, the major averages ended the session mixed. While the Dow rose 70.11 points or 0.3 percent to 24,597.38, the Nasdaq fell 27.98 points or 0.4 percent to 7,070.33 and the S&P 500 edged down 0.53 points or less than a tenth of a percent to 2,650.54.

The choppy trading on Wall Street came as traders continue to waffle between optimism and skepticism about a potential trade deal with China.

Early buying interest was generated after a report from Reuters indicating some Chinese state-owned companies purchased U.S. soybeans for the first time in more than six months was seen as evidence China is making good on its pledges to the U.S.

Reuters also said China appears to be easing its high-tech industrial push, dubbed "Made in China 2025," which has long irked Washington.

However, traders remain somewhat skeptical the U.S. and China will manage to reach a long-term trade agreement amid ongoing disputes over intellectual property and other key issues.

On the U.S. economic front, the Labor Department released a report showing a much steeper than expected drop in initial jobless claims in the week ended December 8th.

The report said initial jobless claims fell to 206,000, a decrease of 27,000 from the previous week's revised level of 233,000. Economists had expected jobless claims to slip to 225,000.

Jobless claims pulled back further off the nearly eight-month high reached two weeks ago to hit their lowest level in almost three months.

A separate report from the Labor Department showed import prices plunged by much more than expected in the month of November amid a steep drop in fuel prices.

The report said import prices plummeted by 1.6 percent in November after climbing by 0.5 percent in October. Economists had expected import prices to slump by 0.9 percent.

Additionally, the Labor Department said export prices tumbled by 0.9 percent in November following an upwardly revised 0.5 percent advance in October.

Export prices had been expected to edge down by 0.1 percent compared to the 0.4 percent increase originally reported for the previous month.

Sector News

Reflecting the lackluster performance by the broader markets, most of the major sectors ended the day showing only modest moves.

Oil service stocks saw substantial weakness, however, with the Philadelphia Oil Service Index tumbling by 1.9 percent to its lowest closing level in fifteen years.

The sell-off by oil service stocks came despite a sharp increase by the price of crude oil, as crude for January delivery jumped $1.43 to $52.58 a barrel.

Significant weakness also emerged among financial stocks, dragging the KBW Bank Index and the NYSE Arca Broker/Dealer Index down by 1.6 percent and 1.4 percent, respectively.

Biotechnology, transportation, and chemical stocks also moved notably lower on the day, while some strength was visible among utilities stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Thursday. Japan's Nikkei 225 Index jumped by 1 percent, while Hong Kong's Hang Seng Index surged up by 1.3 percent.

Meanwhile, the major European markets moved modestly lower on the day. While the French CAC 40 Index dipped by 0.3 percent, the U.K.'s FTSE 100 Index and the German DAX Index both closed just below the unchanged line.

In the bond market, treasuries showed a lack of direction throughout the session before closing roughly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by less than a basis point to 2.911 percent.

Looking Ahead

Economic data may attract attention on Friday, with traders likely to keep an eye on reports on retail sales and industrial production.

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