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Stocks Fluctuate Before Closing Modestly Higher - U.S. Commentary

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Stocks fluctuated over the course of the trading session on Tuesday as traders returned to their desks following the long holiday weekend.

After spending the morning bouncing back and forth across the unchanged line, the major averages climbed more firmly into positive territory in the afternoon.

The major averages pulled back going into the close but still ended the day modestly higher. The Dow inched up 8.07 points or less than a tenth of a percent to 25,891.32, the Nasdaq rose 14.36 points or 0.2 percent to 7,486.77 and the S&P 500 edged up 4.16 points or 0.2 percent to 2,779.76.

The choppy trading came amid uncertainty about the potential for a trade deal between the U.S. and China as the next round of trade talks get underway in Washington, D.C. this week.

News that China accused the U.S. of attempting to curtail its technology development by putting pressure on allies to shun networks supplied by Huawei Technologies raised concerns about tensions between the world's two largest economies.

However, President Donald Trump later told reporters the U.S.-China trade talks are "going very well" and once again hinted that an early March deadline to reach a deal could be postponed.

"I can't tell you exactly about timing, but the date is not a magical date," Trump said in the Oval Office. "A lot of things can happen."

Trump claimed China is "trying to move fast" so that an increase in tariffs on Chinese goods currently set to take effect does not happen.

On the U.S. economic front, the National Association of Home Builders released a report showing a much bigger than expected improvement in homebuilder confidence in the month of February.

The report said the NAHB/Wells Fargo Housing Market Index climbed to 62 in February after rising to 58 in January. Economists had expected the index to inch up to 59.

With the increase, the index continued to recover after hitting a more than three-year low of 56 in December.

"Ongoing reduction in mortgage rates in recent weeks coupled with continued strength in the job market are helping to fuel builder sentiment," said NAHB Chairman Randy Noel.

He added, "In the aftermath of the fall slowdown, many builders are reporting positive expectations for the spring selling season."

Sector News

Most of the major sectors ended the day showing only modest moves, although substantial strength was visible among gold stocks.

Reflecting the strength in the gold sector, the NYSE Arca Gold Bugs Index spiked by 4.4 percent to its best closing level in over seven months.

The rally by gold stocks came amid a sharp increase by the price of the precious metal, with gold for April delivery surging up $22.70 to $1,344.80 an ounce.

Considerable strength was also visible among brokerage stocks, as reflected by the 1.4 percent gain posted by the NYSE Arca Broker/Dealer Index. The index reached a three-month closing high.

On the other hand, telecom stocks saw substantial weakness on the day, dragging the NYSE Arca North American Telecom Index down by 3.1 percent.

The steep drop by the telecom index came after it skyrocketed to its best closing level in over two months last Friday.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. Japan's Nikkei 225 Index inched up by 0.1 percent, while Hong Kong's Hang Seng Index fell by 0.4 percent.

The major European markets also ended the day mixed. While the German DAX Index crept up by 0.1 percent, the French CAC 40 Index slipped by 0.2 percent and the U.K.'s FTSE 100 Index slid by 0.6 percent.

In the bond market, treasuries moved higher after showing a slight decrease last Friday. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, dipped 1.9 basis points to 2.647 percent.

Looking Ahead

Trading on Wednesday may be impacted by reaction to the release of the minutes of the Federal Reserve's latest monetary policy meeting, which may shed additional light on the central bank's "patient" approach to raising interest rates.

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