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U.S. Stocks Holding On To Strong Gains After Early Rally

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Stocks have pulled back off their best levels of the day but continue to see considerable strength in mid-day trading on Tuesday. With the jump on the day, the major averages have more than offset the steep losses posted in the previous session.

Currently, the major averages are hovering firmly in positive territory. The Dow is up 426.96 points or 1.7 percent at 26,324.67, the Nasdaq is up 157.23 points or 2 percent at 8,020.64 and the S&P 500 is up 48.83 points or 1.7 percent at 2,931.92.

The rally on Wall Street comes after U.S. Trade Representative Robert Lighthizer offered the markets a temporary reprieve from concerns about the U.S.-China trade war by announcing a delay in imposing new tariffs on certain Chinese products.

Lighthizer said the 10 percent tariff set to take effect on September 1st should be delayed until December 15th for certain products.

The products benefiting from the delay include cell phones, laptop computers, video game consoles, certain toys, computer monitors, and certain items of footwear and clothing.

Additionally, the USTR announced certain unidentified products will be removed from the tariff list entirely based on health, safety, national security and other factors.

Lighthizer said the delay is part of the USTR's public comment and hearing process and noted it intends to conduct an exclusion process for products subject to the additional tariffs.

The USTR said it will publish additional details and lists of the tariff lines affected by this announcement on its website later today.

The announcement comes less than two weeks after Trump announced plans to impose a 10 percent tariff on the remaining $300 billion worth of Chinese imports, sparking a sell-off on Wall Street.

Trump recently indicated he feels no sense of urgency to resolve the trade dispute with China, suggesting the U.S. could skip the next round of trade talks in September.

In U.S. economic news, the Labor Department released a report showing consumer prices rose in line with economist estimates in the month of July, although the report also showed another bigger than expected increase in core consumer prices.

The Labor Department said its consumer price index climbed by 0.3 percent in July after inching up by 0.1 percent in both May and June. Economists had expected prices to rise by 0.3 percent.

Excluding food and energy prices, core consumer prices also rose by 0.3 percent for the second consecutive month, while economists had expected a 0.2 percent uptick.

Andrew Hunter, Senior U.S. Economist at Capital Economics, said the bigger than expected increase in core prices "suggests that underlying inflationary pressures may not be as subdued as is widely assumed."

"Provided that the incoming activity data continue to deteriorate, however, the Fed still looks likely to cut interest rates again next month," Hunter said.

The report showed the annual rate growth in both consumer prices and core consumer prices accelerated to 1.8 percent and 2.2 percent, respectively.

Sector News

Steel stocks have shown a substantial move back to the upside after falling sharply over the two previous sessions, with the NYSE Arca Steel Index spiking by 3.4 percent. The index ended Monday's trading at a nearly three-year closing low.

Considerable strength is also visible among semiconductor stocks, as reflected by the 2.9 percent jump by the Philadelphia Semiconductor Index.

Oil service stocks are also rebounding from recent weakness, with the Philadelphia Oil Service Index surging up by 2 percent.

The strength in the sector comes amid a sharp increase by the price of crude oil, as crude for September delivery is soaring $2.17 to $57.10 a barrel.

Computer hardware, natural gas, and transportation stocks are also seeing notable strength, while gold stocks are bucking the uptrend amid a drop by the price of the precious metal.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Tuesday. Japan's Nikkei 225 Index slid by 1.1 percent, while Hong Kong's Hang Seng Index plummeted by 2.1 percent.

Meanwhile, the major European markets showed a significant rebound after coming under pressure earlier in the day. While the French CAC 40 Index surged up by 1 percent, the German DAX Index climbed by 0.6 percent and the U.K.'s FTSE 100 Index rose by 0.3 percent.

In the bond market, treasuries have pulled back after moving sharply higher over the course of the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 4.6 basis points at 1.685 percent.

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