After showing a strong initial upward move, stocks have given back some ground over the course of the first hour of trading on Wednesday. The major averages have pulled back well off their best levels of the day, with the Dow moving back near the unchanged line.

The early strength in the markets came as traders reacted positively news that Pulte Homes (PHM) has agreed to acquire rival Centex Corp. (CTX) in a stock-for-stock deal. The deal is valued at $1.3 billion and will create the nation's largest homebuilding company.

Under the terms of the agreement, Centex shareholders will receive 0.975 shares of Pulte common stock for each share of Centex they own. Based on Pulte's closing price on Tuesday, the deal values Centex at $10.50 per share, a 38 percent premium to Centex's closing price.

Meanwhile Dow component Alcoa (AA) reported a $497 million net loss for the first quarter, hurt by the impact of the economic downturn on its core industrial and commercial markets as well as an historic decline in aluminum prices.

On the economic front, wholesale inventories fell by much more than economists had been expecting in the month of February, according to a report released by the Commerce Department on Wednesday, although the report also showed an increase in wholesale sales.

The major averages are currently all in positive territory, although the Dow and the S&P 500 are posting only modest gains. The Dow is currently up 6.37 at 7,795.93, the Nasdaq is up 9.54 at 1,571.15 and the S&P 500 is up 0.86 at 816.41.

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