U.S. Stocks Fluctuate But Maintain Positive Bias

After an initial move to the upside, stocks have fluctuated over the course of morning trading on Thursday. The major averages have bounced back and forth across the unchanged line but largely maintained a positive bias.

Currently, the major averages are all in positive territory. The Dow is up 42.80 points or 0.2 percent at 29,333.65, the Nasdaq is up 41.85 points or 0.4 percent at 9,550.53 and the S&P 500 is up 8.85 points or 0.3 percent at 3,343.54.

The initial strength on Wall Street came in reaction to news that China plans to cut tariffs on approximately $75 billion worth of U.S. goods in half.

A statement from China’s Ministry of Finance said tariffs on some U.S. goods will be cut from to 5 percent from 10 percent, while tariffs on other goods will be lowered to 2.5 percent from 5 percent.

The tariffs reductions, effective on February 14th, will coincide with the U.S. move to halve tariffs on $120 billion worth of Chinese goods as part of the phase one trade deal that was signed last month.

Buying interest has waned since then, however, as traders seem reluctant to continuing picking up stocks following the rally seen over the three previous sessions.

Lingering concerns about the coronavirus outbreak are keeping some traders on the sidelines along with the upcoming release of the Labor Department’s closely watched monthly jobs report.

Employment is expected to increase by about 160,000 jobs in January after rising by 145,000 jobs in December, while the unemployment rate is expected to hold at 3.5 percent.

A day ahead of the release the monthly jobs report, the Labor Department released a report showing first-time claims for U.S. unemployment benefits fell by much more than expected in the week ended February 1st.

The report said initial jobless claims slid to 202,000, a decrease of 15,000 from the previous week’s revised level of 217,000.

Economists had expected jobless claims to edge down to 215,000 from the 216,000 originally reported for the previous week.

With the bigger than expected decrease, jobless claims fell to their lowest level since hitting 193,000 in the week ended April 13, 2019.

A separate report released by the Labor Department showed a notable rebound in labor productivity in the fourth quarter.

The Labor Department said labor productivity jumped by 1.4 percent in the fourth quarter after edging down by 0.2 percent in the third quarter. Economists had expected productivity to surge up by about 1.5 percent.

The report said unit labor costs also shot up by 1.4 percent in the fourth quarter after spiking by 2.5 percent in the previous quarter. The continued increase in labor costs matched economist estimates.

Most of the major sectors are showing only modest moves on the day, contributing to relatively lackluster performance by the broader markets.

Software and biotechnology stocks are seeing some strength on the day, while oil service stocks are giving back ground following the rally seen in the previous session.

In overseas trading, stock markets across the Asia-Pacific region moved sharply higher during trading on Thursday. Japan’s Nikkei 225 Index spiked by 2.4 percent, while Hong Kong’s Hang Seng Index soared by 2.6 percent.

The major European markets have also moved to the upside on the day. While the U.K.’s FTSE 100 Index has risen by 0.3 percent, the German DAX Index and the French CAC 40 Index are up by 0.6 percent and 0.8 percent, respectively.

In the bond market, treasuries have shown a lack of direction over the course of the morning but are currently seeing modest weakness. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 1.4 basis points at 1.663 percent.

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