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Stocks Climb Firmly Into Positive Territory In Morning Trading - U.S. Commentary

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After ending yesterday's volatile session modestly higher, stocks are seeing further upside in morning trading on Wednesday. The major averages have climbed firmly into positive territory, continuing to recover from Monday's sell-off.

Currently, the major averages are hovering near their best levels of the day. The Dow is up 198.14 points or 0.8 percent at 23,873.78, the Nasdaq is up 68.37 points or 1 percent at 6,852.28 and the S&P 500 is up 23.79 points or 0.9 percent at 2,569.95.

Traders once again seem to be going bargain hunting after the markets were unable to sustain the initial upward move in the previous session.

The major averages managed to end Tuesday's trading in positive territory, although many sectors extended recent sell-offs.

Early buying interest has also been generated by optimism the Federal Reserve will strike a more dovish tone in its announcement of its latest monetary policy decision this afternoon.

The Fed is widely expected to raise interest rates by a quarter point, but traders will closely scrutinize the central bank's accompanying statement and forecasts for clues about future rate hikes.

Ahead of the announcement, President Donald Trump has been urging the Fed to refrain from its gradual pace of raising rates.

"Don't let the market become any more illiquid than it already is," Trump told the Fed in a post on Twitter on Tuesday. "Stop with the 50 B's. Feel the market, don't just go by meaningless numbers. Good luck!"

While the Fed will not want to be seen as bowing to political pressure, the central bank may still signal a slower pace of rate hikes due to recent disappointing economic data, low inflation, and concerns about the ongoing trade dispute between the U.S. and China.

Positive sentiment may also have been generated in reaction to a report from the National Association of Realtors unexpectedly showing a significant increase in existing home sales in November.

NAR said existing home sales surged up by 1.9 percent to an annual rate of 5.32 million in November after jumping by 1.4 percent to a rate of 5.22 million in October. Economists had expected existing home sales to drop by 0.6 percent.

Despite the second consecutive monthly increase, existing home sales in November were down by 7.0 percent compared to the same month a year ago.

Housing stocks are showing a strong move to the upside on the heels of the existing home sales data, with the Philadelphia Housing Sector Index jumping by 1.8 percent. The index continues to rebound after ending Monday's trading at its lowest closing level in well over a month.

Considerable strength has also emerged among energy stocks, which are rebounding along with the price of crude oil.

Crude for January delivery is jumping $1.10 to $47.34 a barrel after plummeting $3.64 to a fifteen-month closing low of $46.24 a barrel on Tuesday.

Steel, chemical, biotechnology, and software stocks are also seeing notable strength, moving higher along with most of the other major sectors.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Wednesday. Japan's Nikkei 225 Index slid by 0.6 percent, while Hong Kong's Hang Seng Index edged up by 0.2 percent.

Meanwhile, the major European markets have all moved to the upside on the day. While the U.K.'s FTSE 100 Index has jumped by 1 percent, the French CAC 40 Index and the German DAX Index are up by 0.6 percent and 0.5 percent, respectively.

In the bond market, treasuries have pulled back near the unchanged line after seeing initial strength. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by less than a basis point at 2.823 percent.

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