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U.S. Stocks Close Mostly Higher After Choppy Trading Session

Stocks fluctuated over the course of the trading session on Tuesday before eventually ending the day mostly higher. The major averages all moved to the upside, with the Dow bouncing back after snapping an eight-day winning streak on Monday.

The tech-heavy Nasdaq led the way higher, advancing 122.94 points or 0.8 percent to a new record closing high of 16,511.18. The S&P 500 climbed 25.26 points or 0.5 percent to 5,246.68 and the Dow rose 126.60 points or 0.3 percent to 39,558.11.

The higher close on Wall Street came as treasury yields moved to the downside after an early advance, with the yield on the benchmark ten-year note falling to its lowest closing level in over a month.

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Treasury yields initially moved higher following the release of a Labor Department report showing producer prices in the U.S. increased by more than expected in the month of April.

The Labor Department said its producer price index for final demand climbed by 0.5 percent in April after a revised 0.1 percent dip in March.

Economists had expected producer prices to rise by 0.3 percent compared to the 0.2 percent uptick originally reported for the previous month.

The report also said the annual rate of producer price growth accelerated to 2.2 percent in April from a downwardly revised 1.8 percent in March.

The year-over-year producer price growth was expected to inch up to 2.2 percent from the 2.1 percent originally reported for the previous month.

However, while the report initially generated renewed uncertainty about the outlook for interest rates, some economists pointed to the downward revisions to the March data as a positive sign.

“In effect, with the revision, the PPI rise was as expected. Proof of that was in the 2.2%, as-expected rise in the year-on-year PPI,” said FHN Financial Chief Economist Chris Low. “Still, it is not all benign, as there is brewing pressure in the Core PPI.”

Traders also kept an eye on remarks by Federal Reserve Chair Jerome Powell at the annual general meeting of the Foreign Bankers’ Association.

Powell said the central bank needs to “be patient and let restrictive policy do its work,” noting a lack of further progress on inflation during the first quarter.

The Fed chief also said his confidence inflation will slow towards the 2 percent target is “not as high as it was” but reiterated he does not expect the next move to be a rate hike.

With regard to the producer price inflation report, Powell said he’d call the data “mixed” rather than “hot” due the downward revisions to the March data.

Sector News

Networking stocks moved sharply higher over the course of the session, driving the NYSE Arca Airline Index up by 3.0 percent to its best closing level in over a month.

Computer hardware and semiconductor stocks also saw significant strength on the day, contributing to the advance by the tech-heavy Nasdaq.

Considerable strength was also visible among airline stocks, as reflected by the 1.2 percent gain posted by the NYSE Arca Airline Index.

Gold, brokerage and tobacco stocks also saw notable strength, moving higher along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Tuesday. Japan’s Nikkei 225 Index climbed by 0.5 percent while Hong Kong’s Hang Seng Index slipped by 0.2 percent.

The major European markets also ended the day narrowly mixed. While the German DAX Index edged down by 0.1 percent, the U.K.’s FTSE 100 Index and the French CAC 40 Index both crept up by 0.2 percent.

In the bond market, treasuries moved higher over the course of the session after seeing initial weakness. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell 3.6 basis points to a one-month closing low of 4.445 percent.

Looking Ahead

Consumer price inflation data is likely to be in focus on Wednesday, although reports on retail sales and homebuilder confidence may also attract some attention.

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