RTTNews - Following a lower open, stocks are extending their stay in negative territory in mid-afternoon trading on Wednesday. The major averages saw further downside in reception to disappointing results of a five-year note auction, while they have shown little reaction to the Federal Reserve's Beige Book.

Earlier in the afternoon, the Treasury Department sold a record $39 billion worth of five-year notes. The auction attracted weak demand, however, raising concerns about the government's ability to raise money.

While the Beige Book report said that economic activity continued to be weak going into the summer, it noted that most of the twelve Fed districts indicated that the pace of decline has moderated or that activity has begun to stabilize.

The Commerce Department released a report before the start of trading showing that durable goods orders fell by more than expected in the month of June due largely to a steep drop in orders for transportation equipment.

Traders are also digesting quarterly results from Time Warner (TWX), Qwest (Q) and ConocoPhillips (COP), which reported earnings that largely beat Wall Street estimates. However, revenues fell short, a typical trend that has emerged amid the current earnings season.

The major averages have regained some ground in recent trading, although they currently remain stuck in the red. The Dow is currently down 45.35 at 9,051.37, the Nasdaq is down 11.43 at 1,964.08 and the S&P 500 is down 6.79 at 972.83.

Dow Components

A majority of the Dow components are trading in negative territory, contributing to the moderate pullback by the blue chip index.

The Dow is being pulled lower by shares of Caterpillar (CAT), which are sliding by 2.7 percent. The day's loss is dragging the stock well off the more than six-month closing high it set on Tuesday.

Shares of General Electric (GE) and DuPont (DD) are also retreating, falling by 2.5 percent and 2.3 percent, respectively. Both stocks are backing off of their best closing levels in roughly six weeks.

Alcoa (AA), Chevron (CVX) and Pfizer (PFE) are also moving off of their recent highs, while shares of AT&T (T) are bucking the day's downtrend, posting a gain of 1.6 percent. With the gain, shares of the communications giant are poised for their best finish in nearly three months.

Further, Bank of America (BAC), United Technologies (UTX) and American Express (AXP) are also moving higher. Notably, Bank of America is one of the Dow's leaders in mid-afternoon trading, posting a gain of 1.5 percent.

Sector News

Weakness among resource stocks has continued in mid-afternoon trading, with steel, oil service, natural gas and gold stocks all extending their losses. The move comes amid a second straight day of declines in commodity prices.

Housing stocks are also posting steep losses, as reflected by the 1.6 percent decline being shown by the Philadelphia Housing Sector Index. The index is pulling back off the more than three-month closing high it set in the previous session.

Semiconductor and chemical stocks are also losing ground, with the Philadelphia Semiconductor Index and the S&P Chemical Index both down by 1.3 percent. The pullback is taking the indices away from comparative closing highs set in recent sessions.

Railroad, utility and trucking stocks are also moving lower, while healthcare stocks are holding onto the bulk of their early gains. Biotechnology and airline stocks are also moving higher, although by more modest margins.

In Focus: Economic, Earnings News

As mentioned above, the Commerce Department report showed that durable goods orders fell 2.5 percent in June following a downwardly revised 1.3 percent increase in May. Economists had expected orders to fall 0.6 percent compared to the 1.8 percent increase originally reported for the previous month.

Excluding a 12.8 percent decrease in orders for transportation equipment, orders for durable goods actually rose 1.1 percent in June compared to a 0.8 percent increase in May. The increase surprised economists, who had expected ex-transportation orders to come in unchanged.

In earnings news, Time Warner reported adjusted second quarter net income of $0.45 per share, compared to $0.47 per share in last year's second quarter. While the earnings beat analyst estimates of $0.37 per share, revenues of $6.81 billion fell short of the expected $6.97 billion.

Meanwhile, Sprint Nextel (S) reported a second-quarter net loss of $0.13 per share compared to a loss of $0.12 per share in the same quarter last year. The telecom company also said its revenue fell 10 percent to $8.14 billion amid a decrease in subscribers.

Energy firm ConocoPhillips reported second-quarter earnings of $0.87 per share, compared with net income of $3.50 per share in the same quarter last year. While the results beat analyst estimates of $0.85 per share, revenues fell well short.

In other news, Yahoo! (YHOO) and Microsoft (MSFT) have signed an agreement whereby Microsoft would now power Yahoo search while Yahoo will become the exclusive worldwide relationship sales force for both companies' premium search advertisers. The deal is expected to close sometime in 2010 and has a lifespan of 10 years.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region finished largely on the downside on Wednesday. Hong Kong's Hang Seng Index slid by 2.4 percent, although Japan's benchmark Nikkei 225 Index bucked the downtrend and closed up by 0.3 percent.

Meanwhile, the major European markets closed notably higher, with the German DAX Index and the French CAC 40 Index finishing up by 1.9 percent and 1 percent, respectively, while the U.K.'s FTSE 100 Index rose by 0.4 percent.

In the bond markets, treasuries have turned mixed following the results of the five-year auction. While the five-year not has turned negative, the benchmark ten-year note remains positive, driving the yield on the note down 2.4 basis points to 3.664 percent.

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