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Stocks Offsetting Yesterday's Modest Pullback - U.S. Commentary
1/11/2018 10:46 AM

Stocks have moved to the upside in morning trading on Thursday, offsetting the modest pullback seen in the previous session. The upward move on the day has lifted the Dow and the Nasdaq to new record intraday highs.

The major averages have pulled back off their highs of the session but remain in positive territory. The Dow is up 88.88 points or 0.4 percent at 25,458.01, the Nasdaq is up 14.47 points or 0.2 percent at 7,168.04 and the S&P 500 is up 5.86 points or 0.2 percent at 2,754.09.

Renewed buying interest may have been generated by easing concerns about treasuries after China dismissed a Bloomberg News report that officials have recommended slowing or halting purchases of U.S. debt.

"The news could quote the wrong source of information, or may be fake news," China's State Administration of Foreign Exchange said, according to Reuters.

The SAFE said China has been diversifying its foreign currency reserves investments to help "safeguard the overall safety of foreign exchange assets and preserve and increase their value."

Buying interest is somewhat subdued, however, as a report from the Labor Department showed another unexpected increase in first-time claims for U.S. unemployment benefits.

The report said initial jobless claims rose to 261,000 in the week ended January 6th, an increase of 11,000 from the previous week's unrevised level of 250,000.

The modest increase came as a surprise to economists, who had expected initial jobless claims to edge down to 245,000.

A separate report from the Labor Department unexpectedly showed a modest decrease in producer prices in the month of December.

The Labor Department said its producer price index for final demand edged down by 0.1 percent in December after climbing by 0.4 percent in November. Economists had expected prices to rise by 0.2 percent.

Excluding food and energy prices, core producer prices still dipped by 0.1 percent in December following a 0.3 percent increase in November. Core prices had also been expected to tick up by 0.2 percent.

Traders may also be reluctant to make significant moves ahead of the release of quarterly results from financial giants JPMorgan Chase (JPM) and Wells Fargo (WFC) before the start of trading on Friday.

Extending the strong upward move seen in the previous session, airline stocks are seeing considerable strength in morning trading. The NYSE Arca Airline Index is jumping by 2.1 percent to its best intraday level in almost six months.

Within the airline sector, Delta Air Lines (DAL) is posting a notable gain after beating fourth quarter expectations and raising its 2018 earnings guidance.

Energy stocks have also moved significantly higher amid an increase by the price of crude oil, while steel, computer hardware, and housing stocks have also moved to the upside.

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Thursday. Japan's Nikkei 225 Index fell by 0.3 percent, while Hong Kong's Hang Seng Index inched up by 0.2 percent.

Meanwhile, the major European markets have all moved to the downside on the day. While the U.K.'s FTSE 100 Index is just below the unchanged line, the French CAC 40 Index is down by 0.2 percent and the German DAX Index is down by 0.3 percent.

In the bond market, treasuries are seeing modest weakness after ending the previous session roughly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 1.1 basis points at 2.561 percent.



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