RTTNews - After a slow start, stocks surged and are posting notable gains in mid-morning trading on Wednesday as traders have gone bargain hunting ahead of the Federal Reserve's interest rate decision. The major averages are all in positive territory by substantial margins, looking to offset the losses posted in the previous two sessions.
Traders are looking ahead to the policy announcement from the Federal Reserve at the conclusion of the FOMC meeting at 2:15 p.m. ET. While interest rates are likely be maintained at the current level, traders will pay close attention to the Fed's economic commentary along with any additional information on its quantitative easing measures.
Earlier, traders largely shrugged off a report from the Commerce Department showing that the U.S. trade deficit widened in the month of June compared to the previous month. The deficit for the month still came in narrower than economists had been anticipating.
With imports increasing at a faster pace than exports, the report showed that the trade deficit widened to $27.0 billion in June from $26.0 billion in May. Economists had been expecting a somewhat more significant increase in the size of the deficit to $28.7 billion.
In earnings news, Applied Materials Inc. (AMAT), the world's biggest semiconductor equipment maker, said after the markets closed Tuesday that it swung to a third quarter loss, as sales dropped 39 percent amid weak demand in light of the continuing global recession. Nonetheless, the bottom line beat analyst expectations.
Processed and packaged foods company Sara Lee (SLE) revealed a narrower loss for the fourth quarter, but the results fell well short of expectations. Meanwhile, department store operator Macy's (M) reported second quarter adjusted earnings that beat analyst estimates, although revenues fell just short of forecasts.
In overseas earnings, Swiss food and beverage company Nestle SA reported a decline in its net profit for the first half of the year, as sales declined in the tough economy. The company's profit attributable to non-controlling interests, however, increased significantly from last year.
The world's largest mining company, BHP Billiton (BHP) reported a 30 percent drop in its profit for the full year, excluding write downs, hurt by a sharp drop in metal prices and lower demand.
The major averages have slowed their advance in recent trading and are holding near their best levels of the day. The Dow is currently up 113.13 at 9,354.58, the Nasdaq is up 29.07 at 1,998.80 and the S&P 500 is up 11.10 at 1,005.45.
A broad variety of sectors have shown strong upward moves on the day, offsetting the majority of the losses posted earlier this week.
Housing and airline stocks are turning in some of the day's strongest performances, with the Philadelphia Housing Sector Index and the NYSE Arca Airline Index rising by 3.3 percent and 3.2 percent, respectively. The indices are regaining some of the ground lost in the previous two sessions
Trucking stocks are extending their recent gains, with the Dow Jones Trucking Index posting a gain of 2.1 percent. The advance propelled the index to its best intraday level in ten-months in earlier trading.
Networking, biotechnology, electronic storage, brokerage and a slew of other stocks are also moving sharply higher on the day, reflecting the broad based strength in the equity markets.
Stocks Driven By Analyst Comments
Shares of Commercial Vehicle Group (CVGI) are surging in mid-morning trading after the stock was upgraded by JP Morgan Chase to Overweight from Underweight. The stock has soared by 22 percent, reaching a ten-month intra-day high.
Healthcare Realty Trust (HR) is also gaining after Morgan Keegan raised its rating on the stock to Outperform from Market Perform. The stock is posting a gain of 3.6 percent, reaching its best intraday price in seven months earlier in the session.
On the other hand, shares of YRC Worldwide Inc. (YRCW) are moving lower after a downgrade at Stifel Nicolaus, which lowered its rating on the stock to Sell from Hold. The broker said that recent wage concessions will not be enough for the firm to stave off bankruptcy. The stock is falling by 6.5 percent, backing further off Monday's one and a half month high.
In overseas trading, stock markets across the Asia-Pacific region finished markedly lower on Wednesday. Japan's benchmark Nikkei 225 Index dropped by 1.4 percent, while Hong Kong's Hang Seng Index plunged by 3 percent.
Meanwhile, the major European markets are moving higher, with the French CAC 40 Index up by 1.4 percent, while the German DAX Index and the U.K.'s FTSE 100 Index are both gaining by 1 percent.
In the bond markets, treasuries have moved into negative territory amid the rally on Wall Street. Subsequently the yield on the benchmark ten-year note is trading at 3.697 percent, posting a gain of less than a basis point on the day.
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