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U.S. Stocks Show Significant Rebound On Positive News From Overseas


After gapping open notably higher, stocks saw some further upside over the course of the trading session on Wednesday. The rally on the day came on the heels of the sharp pullback seen in the previous session.

The major averages ended the session near their best levels of the day. The Dow advanced 237.45 points or 0.9 percent to 26,355.47, the Nasdaq soared 102.72 points or 1.3 percent to 7,976.88 and the S&P 500 jumped 31.51 points or 1.1 percent to 2,937.78.

The initial strength on Wall Street reflected a positive reaction to developments overseas, including news that Hong Kong leader Carrie Lam has withdrawn a controversial extradition bill.

The bill, which would have allowed people in Hong Kong to be extradited to mainland China, sparked widespread protests across Hong Kong.

Positive sentiment was also generated in reaction to a report showing growth in China's service sector accelerated in August despite broader economic headwinds.

Back in the U.S., the Commerce Department released a report showing the U.S. trade deficit narrowed in the month of July amid an increase in exports and a modest decrease in imports.

The Commerce Department said the trade deficit narrowed to $54.0 billion in July from a revised $55.5 billion in June.

Economists had expected the deficit to narrow to $53.5 billion from the $55.2 billion originally reported for the previous month.

The narrower trade deficit came as the value of exports climbed by 0.6 percent to $207.4 billion, while the value of imports edged down by 0.1 percent to $261.4 billion.

Stocks reached new highs following the release of the Federal Reserve's Beige Book, which said the U.S. economy expanded at a modest pace through the end of August.

The Beige Book, a compilation of anecdotal evidence on economic conditions in the twelve Fed districts, will be used by Fed officials to make their decision on interest rates at a two-meeting on September 17th and 18th.

The report noted continued concerns regarding tariffs and trade policy uncertainty but said the majority of businesses remain optimistic about the near-term outlook.

Sector News

After turning in some of the market's worst performances in the previous session, steel stocks showed a strong move back to the upside on the day.

Reflecting the strength in the sector, the NYSE Arca Steel Index surged up by 3.2 percent after tumbling by 2.6 percent on Tuesday.

Considerable strength was also visible among semiconductors stocks, as reflected by the 2.8 percent jump by the Semiconductor Index.

Oil service stocks also saw substantial strength on the day, benefiting from a sharp increase by the price of crude oil. With crude for October delivery spiking $2.32 to $56.26 a barrel, the Philadelphia Oil Service Index shot up by 2.7 percent.

Computer hardware, gold and banking stocks also saw notable strength on the day, moving higher along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Wednesday, with Hong Kong stocks leading the way higher. Hong Kong's Hang Seng Index spiked by 3.9 percent, while China's Shanghai Composite Index advanced by 0.9 percent.

The major European markets also moved to the upside on the day. While the U.K.'s FTSE 100 Index rose by 0.6 percent, the German DAX Index jumped by 1 percent and the French CAC 40 Index surged up by 1.2 percent.

In the bond market, treasuries closed roughly flat after recovering from early weakness. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down less than a basis point at 1.459 percent.

Looking Ahead

Reports on private sector employment, weekly jobless claims and service sector activity may attract attention on Thursday, although trading activity may be subdued ahead of the release of the Labor Department's more closely watched monthly jobs report on Friday.

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