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Stocks Extending Recent Upward Trend In Morning Trading - U.S. Commentary


Stocks have moved mostly higher in morning trading on Wednesday, extending the strong upward move seen over the course of the three previous sessions. The major averages continue to recover after tumbling to their lowest closing levels in well over a year on Christmas Eve.

In recent trading, the major averages have pulled back off their highs, although they currently remain positive. The Dow is up 43.49 points or 0.2 percent at 23,830.94, the Nasdaq is up 22.76 points or 0.3 percent at 6,919.76 and the S&P 500 is up 1.03 points or less than a tenth of a percent at 2,575.44.

The markets continue to benefit from optimism about potential trade deal between the U.S. and China after talks between U.S. and Chinese officials were extended to a third day.

Officials have not made public comments about the outcome of the talks, although traders remain hopeful the U.S. and China will reach a long-term trade agreement before a March 1st deadline.

Buying interest is somewhat subdued, however, as traders look ahead to the release of the minutes of the Federal Reserve's latest monetary policy meeting.

The minutes of the December meeting will provide further insight into the Fed's decision to raise interest rates by 25 basis points to a range of 2.25 percent to 2.50 percent.

Traders are likely to scrutinize the minutes for clues about the outlook for interest rates after Fed Chairman Jerome Powell noted last Friday the central bank "will be patient" as it watches the economy evolve.

The continued strength on Wall Street comes even as the partial government shutdown seems likely to continue after President Donald Trump and Democratic leaders addressed the nation last night.

Both Trump and the Democrats seemed dug in on their positions over the president's demand for $5.7 billion to construct a wall on the U.S. border with Mexico.

Semiconductor stocks are turning in some of the market's best performances in morning trading, driving the Philadelphia Semiconductor Index up by 1.7 percent.

The rally by semiconductor stocks comes as traders shrug off a report from Nikkei indicating tech giant Apple (AAPL) is cutting iPhone production by 10 percent between January and March.

Considerable strength has also emerged among computer hardware stocks, with NYSE Arca Computer Hardware Index surging up by 1.7 percent.

Oil service, steel, and gold stocks are also seeing notable strength on the day, while some weakness is visible among telecom stocks.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan's Nikkei 225 Index jumped by 1.1 percent, while Hong Kong's Hang Seng Index soared by 2.3 percent.

The major European markets have also moved to the upside on the day. While the French CAC 40 Index is up by 1 percent, the German DAX Index is up by 0.9 percent and the U.K.'s FTSE 100 Index is up by 0.7 percent.

In the bond market, treasuries have climbed back near the unchanged line after seeing initial weakness. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by less than a basis point at 2.717 percent.

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