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Stocks Close Mostly Higher After Significant Late-Day Recovery - U.S. Commentary

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Stocks saw considerable weakness throughout much of the trading day on Thursday before staging a substantial recovery late in the session. The major averages skyrocketed off their worst levels of the day and into positive territory.

After falling by more than 600 points, the Dow showed a substantial rebound before closing up 260.37 points or 1.1 percent at 23,138.82. The Nasdaq also rose 25.14 points or 0.4 percent to 6,579.49 and the S&P 500 advanced 21.13 points or 0.9 percent to 2,488.83.

Profit taking helped to drag stocks lower early in the day, as traders cashed in on the rally seen on Wednesday, when the Dow posted its single-day point gain in history.

Lingering concerns about the global economic outlook and the ongoing government shutdown also weighed on the markets.

Trading activity remained relatively subdued, however, allowing traders to drive stocks back to the upside late in the session.

On the U.S. economic front, the Labor Department recently released a report showing a slight drop in first-time claims for U.S. unemployment benefits in the week ended December 22nd.

The report said initial jobless claims slipped to 216,000, a decrease of 1,000 from the previous week's revised level of 217,000.

Economists had expected jobless claims to inch up to 217,000 from the 214,000 originally reported for the previous week.

Meanwhile, a separate report from the Conference Board showed a significant deterioration in consumer confidence in the month of December.

The Conference Board said its consumer confidence index slumped to 128.1 in December after dipping to a revised 136.4 in November.

Economists had expected the consumer confidence index to edge down to 134.0 from the 135.7 originally reported for the previous month.

The bigger than expected decrease by the headline index reflected a continued deterioration in consumer expectations, with the expectations index plunging to 99.1 in December after falling to 112.3 in November.

"While consumers are ending 2018 on a strong note, back-to-back declines in Expectations are reflective of an increasing concern that the pace of economic growth will begin moderating in the first half of 2019," said Lynn Franco, Senior Director of Economic Indicators at the Conference Board.

Sector News

Chemical stocks showed a significant move to the upside late in the session, driving the S&P Chemical Sector Index up by 1.9 percent. The index continued to rebound after ending Monday's trading at a two-year closing low.

Networking, software, and housing stocks also moved notably higher, contributing to the late-day recovery by the broader markets.

On the other hand, notable weakness remained visible among oil service stocks, as reflected by the 1.1 percent drop by the Philadelphia Oil Service Index.

The weakness in the oil service sector came amid a pullback by the price of crude oil, with crude for February delivery slumping $1.61 to $44.61 a barrel after soaring $3.69 to $46.22 a barrel on Wednesday.

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 skyrocketed by 3.9 percent, but China's Shanghai Composite Index fell by 0.6 percent.

Meanwhile, the major European markets moved the downside on the day. While the German DAX Index plunged by 2.4 percent, the U.K.'s FTSE 100 Index tumbled by 1.5 percent and the French CAC 40 Index dropped by 0.6 percent.

In the bond market, treasuries rebounded following the notable pullback seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slid by 5.4 basis points to a nearly nine-month closing low of 2.743 percent.

Looking Ahead

Any developments regarding the government shutdown may impact trading on Friday along with reports on Chicago-area business activity and pending home sales.

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