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Stocks Recover From Early Move To The Downside - U.S. Commentary


After coming under pressure early in the session, stocks have shown a notable recovery over the course of the trading day on Thursday. The major averages have climbed well off their lows of the session and back near the unchanged line.

Currently, the major averages are posting modest gains. The Dow is up 43.32 points or 0.2 percent at 23,922.44, the Nasdaq is up 5.69 points or 0.1 percent at 6,962.77 and the S&P 500 is up 3.03 points or 0.1 percent at 2,587.99.

The initial weakness on Wall Street came as traders cashed in on recent strength on Wall Street as assessments of trade talks between the U.S. and China showed no significant breakthroughs.

A statement from the office of U.S. Trade Representative Robert Lighthizer said the meetings were held as part of an agreement between President Donald Trump and Chinese President Xi Jinping to engage in 90 days of negotiations with a view to achieving needed structural changes in China.

The statement said the talks included discussions on China's pledge to purchase a substantial amount of U.S. goods and services but did not provide details about the tone or outcome of the meetings.

"The United States officials conveyed President Trump's commitment to addressing our persistent trade deficit and to resolving structural issues in order to improve trade between our countries," the statement said.

The statement indicated the delegation led by Deputy U.S. Trade Representative Jeffrey Gerrish will now report back to receive guidance on the next steps.

Meanwhile, a statement from China's Commerce Ministry described the talks as "extensive, in-depth and detailed" and said the meetings "laid a foundation for the resolution of each others' concerns."

The comments do not dash hopes for a long-term trade deal between the U.S. and China, but traders were likely looking more concrete results.

Selling pressure waned shortly after the start of trading, however, with recent upward momentum contributing to the subsequent rebound by stocks.

On the U.S. economic front, the Labor Department released a report showing a bigger than expected drop in initial jobless claims in the week ended January 5th.

The report said initial jobless claims fell to 216,000, a decrease of 17,000 from the previous week's revised level of 233,000.

Economists had expected jobless claims to dip to 225,000 from the 231.000 originally reported for the previous week.

Sector News

Most of the major sectors are showing only modest moves on the day, contributing to the lackluster performance currently being shown by the broader markets.

Gold stocks are seeing some weakness amid a modest decrease by the price of the precious metal, while some strength has emerged among utilities and biotechnology stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. Japan's Nikkei 225 Index slumped by 1.3 percent, while Hong Kong's Hang Seng Index edged up by 0.2 percent.

The major European markets also ended the day mixed. While the French CAC 40 Index dipped by 0.2 percent, the German DAX Index rose by 0.3 percent and the U.K.'s FTSE 100 Index climbed by 0.5 percent.

In the bond market, treasuries are seeing modest strength after trending lower over the past few sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.3 basis points at 2.715 percent.

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