U.S. Stocks Advance Amid Apparent De-Escalation Of U.S.-Iran Conflict

After moving modestly higher in early trading on Wednesday, stocks saw some further upside over the course of the session. With the upward move on the day, the tech-heavy Nasdaq ended the session at a new record closing high.

The major averages gave back ground going into the close but remained firmly positive. The Dow climbed 161.41 points or 0.6 percent to 28,745.09, the Nasdaq advanced 60.66 points or 0.7 percent to 9,129.24 and the S&P 500 rose 15.87 points or 0.5 percent to 3,253.05.

Buying interest picked up as President Donald Trump delivered a statement responding to last night’s attack by Iran, indicating the U.S. would hit Iran with new sanctions but not respond militarily.

Trump confirmed earlier reports that there were no American casualties as a result of Iran’s missile strikes on Iraqi military bases housing U.S. troops.

Iran purportedly launched more than a dozen ballistic missiles at multiple targets, which initially raised concerns about an escalation of the confrontation between the U.S. and Iran.

However, Trump said, “Iran appears to be standing down,” which he called a “good thing for all parties concerned and a very good thing for the world.”

The latest remarks by Trump reflect a significant shift from recent comments by the president threatening to use military force in response to Iran’s retaliation for the U.S. killing of Quds Force Commander Qasem Soleimani last week.

The markets also benefited from the release of a report from payroll processor ADP showing much stronger than expected private sector job growth in the month of December.

ADP said private sector employment surged up by 202,000 jobs in December after climbing by a substantially upwardly revised 124,000 jobs in November.

Economists had expected employment to increase by about 160,000 jobs compared to the addition of 67,000 jobs originally reported for the previous month.

On Friday, the Labor Department is scheduled to release its more closely watched monthly jobs report, which includes both public and private sector jobs.

Economists expect employment to increase by 160,000 jobs in December after spiking by 266,000 jobs in November, while the unemployment rate is expected to hold at 3.5 percent.

Sector News

Software stocks showed a significant move to the upside over the course of the session, driving the Dow Jones U.S. Software Index up by 1.3 percent to a new record closing high.

Considerable strength also emerged among biotechnology stocks, as reflected by the 1.1 percent gain being posted by the NYSE Arca Biotechnology Index.

Brokerage, computer hardware and transportation also saw notable strength on the day, moving higher along with most of the other major sectors.

On the other hand, gold stocks moved sharply lower as the day progressed, dragging the NYSE Arca Gold Bugs Index down by 4.2 percent.

The sell-off by gold stocks came amid a steep drop by the price of the precious metal, as gold for February delivery tumbled $14.10 to $1,560.20 an ounce.

A nosedive by the price of crude oil also contributed to substantial weakness among energy stocks, with crude for February delivery plunging $3.09 to $59.61 a barrel.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan’s Nikkei 225 Index tumbled by 1.6 percent, while China’s Shanghai Composite Index slumped by 1.2 percent.

Meanwhile, the major European markets moved to the upside over the course of the session. While the U.K.’s FTSE 100 Index closed just above the unchanged line, the French CAC 40 Index rose by 0.3 percent and the German DAX Index advanced by 0.7 percent.

In the bond market, treasuries pulled back sharply after moving modestly higher earlier in the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 4.7 basis points to 1.874 percent.

Looking Ahead

A report on weekly jobless claims may attract some attention on Thursday, although trading activity is likely to be somewhat subdued ahead of the release of the Labor Department’s more closely watched monthly jobs report on Friday.

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