U.S. Stocks Regain Ground After Losses

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07/12/2018 | 02:32 pm

By Ben St. Clair

-- Stocks rebound from Wednesday's fall

-- China guides currency lower

-- Commodity futures rise

U.S. stocks rose Thursday, putting major indexes on track for a rebound from a trade-driven market midweek selloff.

The Dow Jones Industrial Average rose 124 points, or 0.5%, to 24826 in morning trading. The S&P 500 gained 0.3%, while the Nasdaq Composite added 0.4%.

A major deal announcement contributed to the S&P 500's biggest gainer, while trade tensions appeared to settle a day after reports that the Trump administration is considering additional tariffs on $200 billion of products.

Software company CA led the S&P 500 higher after Broadcom agreed to buy the firm for $18.9 billion late Wednesday. Shares of CA rose 18% to lead the broader tech sector higher.

Meanwhile, industrial companies, including aerospace firms, were also contributing to Thursday's better performance to recover from some of the losses suffered Wednesday, as investors digested the latest trade salvo out of Washington, D.C.

Shares of Lockheed Martin rose 1.4%, while Boeing, a Dow component, added 1%.

Despite Thursday's upbeat session, investors continue to worry that the relatively small pronouncements the U.S. and China have taken against one another on trade will eventually lead to more dramatic measures, such as the multibillion tariff package the Trump administration is now considering.

The volatility could also distract from the coming earnings season, even though S&P 500 companies are expected to grow second-quarter profits by 20% from a year earlier, according to FactSet.

"We're at a situation where the markets have to react to the uncertainty, " said Jim Smigiel at SEI Investments.

U.S. economic data out Thursday showed higher inflation. The consumer-price index, which gauges the prices Americans pay on most goods, rose 2.9% from the year before, the highest level since February 2012, the Labor Department said.

Elsewhere, the Stoxx Europe 600 was up 0.5% in afternoon trading, led by gains in travel and leisure and media companies.

In Asia, Hong Kong's Hang Seng was up 0.6% while the Shanghai Composite Index rose 2.2%. Japan's Nikkei rose 1.2%.

Thursday's gains in Asian equities came as China guided the yuan to its largest one-day drop against the U.S. dollar in a year and a half. The central bank, which determines a daily dollar-yuan exchange rate and allows the currency to trade within 2% of that level, set the dollar's reference rate at 6.6726 yuan.

A weaker yuan makes Chinese exports more competitive and its goods more valuable abroad.

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