Stocks are seeing moderate strength in mid-morning trading on Wednesday, as traders react to the latest wholesale trade numbers on the heels of upbeat economic news from China. The major averages are all in positive territory, offsetting some recent losses.A short time ago, the Commerce Department reported that wholesale inventories increased by 0.4 percent in April following an upwardly revised 0.7 percent increase in March. With the increase, wholesale inventories rose for the fourth consecutive month.
Economists had expected inventories to increase by 0.5 percent compared to the 0.4 percent growth originally reported for the previous month.
The markets are also fixated on testimony from Federal Reserve Chairman Ben Bernanke, as he continues his remarks on the economy before the House Budget Committee.
Initial strength in the markets came after Reuters cited sources as saying that Chinese exports surged up by about 50 percent in May compared to the same month a year ago. The report on Chinese trade, due to be released on Thursday, had been expected to show a 32.0 year-over-year increase in exports.
The sizable external demand for Chinese goods suggests that another downturn by the global economy is highly unlikely.
At 2:00 p.m. ET, the Federal Reserve will release its Beige Book report, a compilation of economic commentary from the twelve Fed districts. Earlier in the week, Fed Chairman Bernanke said he expects the moderate pace of recovery to continue.
On the corporate front, BP Plc (BP) remains under pressure even after slowing the sizable leak from its well in the Gulf of Mexico. The U.S. government recently criticized the firm for taking too much time to initiate payment on claims filed by residents affected by the spill.
Texas Instruments (TXN) is also in focus today after increasing the low end of its second quarter profit and revenue forecast after the markets closed in the previous session.
The major averages have seen choppy movement since moving off of their session highs. The Dow is currently up 26.15 points or 0.3 percent at 9,966.13, the Nasdaq is up 7.23 points or 0.3 percent at 2,177.80 and the S&P 500 is up 3.30 points or 0.3 percent at 1,065.30.
Commercial real estate stocks are some of the morning's best performers, resulting in a 1.6 percent advance by the Morgan Stanley REIT Index. The move is lifting the index further off of Monday's three-month closing low.
Railroad stocks are also seeing notable gains, driving the Dow Jones Railroads Index up by 1.6 percent. With the gain, the index is also moving further off of a recent three-month closing low.
Oil service, steel and natural gas stocks are also up by sizable margins following today's news about China, which is seen as indicative of the likelihood of increased demand for resources.
Equinix (EQIX) is notably higher after being upgraded at Citigroup from Hold to Buy based on projected revenue growth. The stock has gained 6.6 percent, bouncing off of the ten-month closing low set in the previous session.
PulteGroup (PHM) is also seeing a strong upward move after Stifel Nicolaus upgraded the stock from Sell to Hold. Shares are currently up by 1.8 percent, moving further off of a recent five and a half month closing low.
On the other hand F5 Networks (FFIV) is moving lower following a downgrade at Ticonderoga from Buy to Neutral. The stock has lost 0.7 percent, slipping to a two-week intraday low in earlier dealing.
Currency, Commodity Markets
Crude oil futures are rising $1.15 to $73.14 a barrel after advancing $0.55 to $71.99 a barrel on Tuesday. Oil saw a bounce in Asian trading today after the American Petroleum Institute’s oil inventory report showed that crude oil stockpiles fell by 4.5 million barrels in the week ended June 4th.
Gold futures are currently receding $10.30 to $1,235.30 an ounce. In the previous session, the precious metal added $4.80 to $1,245.60 an ounce.
Among currencies, the U.S. dollar is trading at 91.56 yen compared to the 91.46 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.1959 compared to yesterday’s $1.2014.
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