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Stocks Holding On To Strong Gains In Mid-Day Trading - U.S. Commentary

With traders reacting positively to Alcoa's (AA) quarterly results, stocks are seeing considerable strength in mid-day trading on Wednesday. The upward move comes after economic worries contributed to a substantial sell-off in the previous session.

The major averages have pulled back well off their best levels in recent trading but are holding on to strong gains. The Dow is up 85.11 points or 0.7 percent at 12,801.04, the Nasdaq is up 28.61 points or 1 percent at 3,019.83 and the S&P 500 is up 10.50 points or 0.8 percent at 1,369.09.

The rebound by stocks comes on the heels of the release of aluminum giant Alcoa's first quarter results, which is seen as the unofficial start of the earnings season.

After the close of trading on Tuesday, Alcoa reported first quarter adjusted earnings of $0.10 per share, surprising analysts, who had expected the company to report a loss of $0.04 per share. The company also reaffirmed its outlook for 7 percent growth in global aluminum demand in 2012.

The results have generated some optimism about the outlook for corporate earnings, although stocks remain well off their recent highs amid lingering concerns about the global economy.

In U.S. economic news, the Labor Department released a report showing a 1.3 percent increase in import prices in the month of March. The price growth, which followed a 0.1 percent drop in February, exceeded analyst estimates for a 1.0 percent increase.

The report also showed that export prices rose by 0.8 percent in March following a 0.4 percent increase in February. Economists had expected export prices to increase by 0.3 percent.

Later in the day, the Federal Reserve is due to release its Beige Book, a compilation of anecdotal evidence on economic conditions from each of the twelve Federal Reserve districts. The report is typically released about two weeks before a monetary policy meeting is held.

Among individual stocks, shares of Applied Micro Circuits (AMCC) have turned higher over the course of the trading day even though the chip maker warned of a wider than previously estimated fourth quarter loss. Applied Micro Circuits is currently up by 5.9 percent after hitting a five-month low in early trading.

Meanwhile, Nokia (NOK) has come under pressure after the cellphone maker slashed the first quarter outlook for its devices and services unit. Shares of Nokia are down by 12.9 percent.

Sector News

Housing stocks continue to see significant strength in mid-day trading, partly offsetting the steep losses posted in the previous session. The Philadelphia Housing Sector Index is up by 2.8 percent after tumbling by 3.9 percent on Tuesday.

PulteGroup (PHM) and Ryland Group (RYL) are turning in two of the housing sector's best performances, advancing by 7.9 percent and 5.9 percent, respectively.

Considerable strength has also emerged among networking stocks, as reflected by the 2.3 percent gain being posted by the NYSE Arca Networking Index. Adtran (ADTN) is helping to lead the sector higher, surging up by 7.3 percent after reporting better than expected first quarter earnings.

Semiconductor stocks have also shown a strong move to the upside on the day, driving the Philadelphia Semiconductor Index up by 2 percent. Steel, telecom, brokerage, and defense stocks are also posting notable gains.

Meanwhile, gold stocks are giving back some ground after bucking the downtrend seen over the two previous sessions.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Wednesday following the sell-off seen on Wall Street overnight. Japan's Nikkei 225 Index fell by 0.8 percent, while Hong Kong's Hang Seng Index ended the day down by 1.1 percent.

Meanwhile, the major European markets moved to the upside on the day but closed well off their best levels. The German DAX Index advanced by 1 percent, while the U.K.'s FTSE 100 Index and the French CAC 40 Index rose by 0.7 percent and 0.6 percent, respectively.

In the bond market, treasuries haven given back some ground after moving sharply higher in recent sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 3.8 basis points at 2.026 percent.

by RTTNews Staff Writer

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