Stocks are holding onto standout gains in mid-afternoon trading on Wednesday as traders digest the Federal Reserve's statement following the its two-day monetary policy meeting. The major averages all remain firmly in positive territory.

The Fed's statement was largely unchanged from the statement issued following its March meeting, although it did acknowledge that the pace of contraction in economic activity appears to be somewhat slower.

As was expected, the Fed left its target range for the federal funds rate at 0 to 0.25 percent and reiterated that it expects that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period.

Earlier in the day, the Commerce Department released a report showing that GDP decreased at an annual rate of 6.1 percent in the first quarter, better than the 6.3 percent drop in the previous quarter, but considerably worse than the 4.7 percent decline economists had anticipated.

A steep drop in private inventories played a big part in the sharper than expected contraction in GDP, with the drop in inventories subtracting 2.8 percentage points from first quarter GDP.

Peter Boockvar, equity strategist at Miller Tabak, noted, The huge inventory drawdown will be reversed to some extent to the upside, thus helping economic activity.

The substantial decline in inventories helped to offset a rebound in consumer spending, which rose by a bigger than expected 2.2 percent in the first quarter after falling by 4.3 percent in the fourth quarter and 3.8 percent in the third quarter.

In other news, it was reported earlier that the first swine flu death in the United States occurred in Texas, with the death of a nearly two-year old child who was visiting from Mexico.

Jay Bryson, a global economist at Wachovia, discussed the economic impact of the swine flu outbreak in an interview with RTT News. Bryson said it is too early to try and pinpoint what the effects could be, but he said he draws on the experience of the 2003 SARS epidemic to make predictions.

In terms of the U.S., Bryson stressed that the outbreak comes at a bad time, highlighting the fact that the economy may be at an inflection point right now. It's not the best time, Bryson said.

The major averages have moved roughly sideways in recent trading, hovering near their best levels of the day. The Dow is currently up 195.30 at 8,212.25, the Nasdaq is up 43.85 at 1,717.66 and the S&P 500 is up 21.40 at 876.56.

Dow Components

Nearly all of the Dow components are moving higher on the day, contributing to the standout gain being shown by the blue chip index.

Disney (DIS) is helping to lead the Dow higher, with the entertainment giant currently posting a 9.7 percent gain. With the advance, shares of Disney have risen to their best intraday level in just under three months.

Financial related stocks are also helping to drive the Dow higher. While Citigroup (C) and Bank of America (BAC) are posting gains of 7.1 percent and 6.9 percent, respectively, American Express (AXP) and JP Morgan (JPM) are both currently up 5 percent.

Boeing (BA), Hewlett-Packard (HPQ), and Wal-Mart (WMT) are among the other Dow components posting notable gains in mid-afternoon trading.

At the other end of the spectrum, Verizon (VZ) is currently the only Dow component that is trading below the unchanged line, with the telecom giant down 0.7 percent.

Sector News

A vast majority of the major sectors continue to experience considerable strength on the day, contributing to the upward move by the broader markets. Real estate stocks are posting notable gains, driving the Morgan Stanley REIT Index up 5.5 percent on the day.

Within the real estate sector, one of the best performances is being shown by Cedar Shopping Centers Inc. (CDR), which is currently up 13.4 percent after reaching its best intraday level in over a month and a half.

While healthcare provider stocks also continue to post substantial gains, significant strength is also visible among electronic storage, banking, and transportation stocks.

Additionally, oil service stocks are posting notable gains amid a significant increase by the price of oil. With crude for June delivery rising $12.5 to $51.17 a barrel, the Philadelphia Oil Services Index is currently up 5.3 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region ended Wednesday's trading firmly in positive territory, as traders went bargain hunting. However, the Japanese market remained closed on account of Showa Day.

The major European markets also experienced substantial strength, with the U.K.'s FTSE 100 Index advancing 2.3 percent, while the French CAC 40 Index and the German DAX Index rose 2.2 percent and 2.1 percent, respectively.

In the bond market, treasuries have moved lower following the Fed announcement after showing a lack of direction for much of the day. Subsequently, the yield on the benchmark ten-year note is currently up 8.8 basis points at 3.09 percent.

For comments and feedback: contact