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Stocks Move Higher In Morning Trading, Nasdaq Outperforms - U.S. Commentary


After initially showing a lack of direction, stocks have moved mostly higher over the course of morning trading on Thursday. The major averages have all climbed into positive territory, with the tech-heavy Nasdaq showing a notable advance.

In recent trading, the major averages have pulled back off their highs of the session. The Nasdaq is up 37.17 points or 0.5 percent at 7,062.94, while the Dow is up 11.07 points or 0.1 percent at 24,586.69 and the S&P 500 is up 4.48 points or 0.2 percent at 2,643.18.

Semiconductor stocks have shown a substantial move to the upside in morning trading, resulting in a 5.7 percent spike by the Philadelphia Semiconductor Index. The index has jumped to its best intraday level in well over a month.

Shares of Xilinx (XLNX) are moving sharply higher after the chipmaker reported better than expected fiscal third quarter results and provided upbeat guidance for the current quarter.

Significant strength has also emerged among computer hardware stocks, as reflected by the 2 percent advance by the NYSE Arca Computer Hardware Index.

Housing, transportation, and oil service stocks are also seeing notable strength, while some weakness is visible among tobacco and pharmaceutical stocks.

Overall buying interest has remained somewhat subdued after Commerce Secretary Wilbur Ross told CNBC the U.S. is "miles and miles" from a trade deal with China.

"Frankly, that shouldn't be too surprising," Ross said in an interview on CNBC's "Squawk Box," noting the U.S. and China have "lots and lots of issues."

The comments from Ross come ahead of Chinese Vice Premier Liu He's trip to Washington next week for the next round of trade negotiations.

Concerns about a U.S.-China trade deal have partly offset positive sentiment generated by a report from the Labor Department showing initial jobless claims fell to their lowest level in almost fifty years in the week ended January 19th.

The report said initial jobless claims slid to 199,000, a decrease of 13,000 from the previous week's revised level of 212,000.

The drop surprised economists, who had expected jobless claims to rise to 220,000 from the 213,000 originally reported for the previous week.

With the unexpected decrease, jobless claims fell to their lowest level since hitting 197,000 in November of 1969.

Meanwhile, a separate report from the Conference Board showed a modest decrease by its index of leading U.S. economic indicators in the month of December.

The Conference Board said its leading economic index edged down by 0.1 percent in December after rising by 0.2 percent in November. The slight drop by the index matched economist estimates.

"The US LEI declined slightly in December and the recent moderation in the LEI suggests that the US economic growth rate may slow down this year," said Ataman Ozyildirim, Director of Economic Research at the Conference Board.

He added, "While the effects of the government shutdown are not yet reflected here, the LEI suggests that the economy could decelerate towards 2 percent growth by the end of 2019."

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Thursday, although Japan's Nikkei 225 Index edged down by 0.1 percent. Hong Kong's Hang Seng Index and Australia's S&P/ASX 200 Index both rose by 0.4 percent.

Meanwhile, the major European markets are turning in a mixed performance on the day. While the U.K.'s FTSE 100 Index is down by 0.4 percent, the German DAX Index is up by 0.2 percent and the French CAC 40 Index is up by 0.5 percent.

In the bond market, treasuries have moved back to the upside following the pullback seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3.4 basis points at 2.721 percent.

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