RTTNews - Stocks are posting notable gains in mid-afternoon trading on Wednesday, although they have backed off of their best levels of the day following the Fed's announcement. The major averages are all in positive territory, attempting to hold onto gains heading into the close.

The Federal Open Market Committee, the policy-making arm of the Federal Reserve, announced Wednesday that it was maintaining the target range for its benchmark federal funds rate at zero to 0.25 percent.

The Fed also repeated its belief that low rates will persist for what it calls an extended period. The central bank added that economic activity is leveling out.

The central bank said it will gradually slow the pace of treasury purchases and expects that the full amount of $300 billion will be purchased by the end of October.

Going into the meeting, the Fed was universally expected to leave rates unchanged, but there was some speculation that the central bank could announce the end of its program to buy treasury bonds, a move it had undertaken to further stimulate the economy.

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.

The major averages have moved to the downside in recent trading, but they remain firmly in positive territory, The Dow is currently up 108.97 at 9,350.42, the Nasdaq is up 29.21 at 1,998.94 and the S&P 500 is up 10.38 at 1,004.73.

Dow Components

Travelers (TRV) is one of the Dow's best performers, posting gain of 3.5 percent in mid-afternoon trading. With the gain, the stock is offsetting the losses posted in the previous two sessions.

United Technologies (UTX) is also gaining, advancing by 3.9 percent. The stock is building on its recent gains, poised to close at its best level in ten months.

JP Morgan Chase (JPM), Microsoft (MSFT), Verizon (VZ), Caterpillar (CAT) and a number of other Dow components are also moving considerably higher. Hewlett Packard (HPQ) is posting a more modest gain of 1.5 percent. With the climb, shares of the computer technology firm have reached their best intra-day price in roughly ten months.

Shares of IBM Corp. (IBM), General Electric (GE) and AT&T (T) are also on the rise, while chemical giant DuPont (DD) and food stalwart Coca-Cola (KO) are the only two laggards in the blue chip index.

Sector News

Networking, airline, housing and financial stocks are continuing to take back recent losses, posting strong gains in mid-afternoon trading.

Notable strength is also visible among defense stocks, with the Philadelphia Defense Sector climbing by 2.9 percent. With the gain, the index is poised to finish the session at a seven month high.

The index is being helped by shares of GenCorp (GY), which are up by 7 percent. The stock is moving back toward a six month closing high set on Monday.

Trucking, software and biotechnology stocks also rebounding, while electronic storage stocks are extending recent gains. The NYSE Arca Disk Drive Index is up by 2.1 percent, reaching a fresh ten-month intraday high.

Meanwhile, weakness has emerged in chemical stocks, with the S&P Chemical Index posting a loss of 0.3 percent. The decline has the index poised to close at a two week low.

In Focus: Trade Data, Earnings News

As mentioned above, the Commerce Department report revealed that the trade deficit widened to $27.0 billion in June from $26.0 billion in May, with imports increasing at a faster pace than exports. 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.

Department store operator Macy's (M) reported second quarter adjusted earnings that beat analyst estimates, although revenues fell just short of forecasts.

Overseas, 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.

Other Markets

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 closed considerably higher, with the French CAC 40 Index and the German DAX Index rising by 1.5 percent and 1.2 percent, respectively, while the U.K.'s FTSE 100 Index posted a gain of 1 percent.

In the bond markets, treasuries are showing moderate weakness following the Fed announcement. Subsequently the yield on the benchmark ten-year note is trading at 3.723 percent, posting a gain of 3.0 basis points on the day.

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