US Market Report

Stocks Posting Strong Gains In Mid-Morning Trading

Stocks are up by significant margins in mid-morning trading on Wednesday, as a batch of strong earnings reports and bargain hunting have driven buying interest. Nonetheless, concerns about the effectiveness of the European bailout plan remain a key overhang for the markets. The major averages are all notably higher, further offsetting last week's losses.

In earnings news this morning, Macy's Inc. (M) reported first-quarter earnings and revenues above analyst estimates. Based on strong sales trends, Macy's increased its full-year 2010 guidance on April 27. However, the company held off on raising annual guidance further due to economic uncertainties.

After the markets closed for trading in the previous session, media and entertainment giant Walt Disney Co. (DIS) unveiled second quarter profit and revenues that also topped forecasts.

Video-game publisher Electronic Arts Inc. (ERTS) reported a fourth quarter profit compared to a year-ago loss, beating profit projections along with its revenues. Looking ahead, Electronic Arts reaffirmed its forecast for the first quarter and fiscal year 2011.

On the economic front, the Commerce Department released a report showing that the U.S. trade deficit widened to $40.4 billion in March from a revised deficit of $39.4 billion in February. Economists had expected the deficit to widen to $40.5 billion compared to the $39.7 billion deficit originally reported for the previous month.

The Treasury Department will release its budget for April at 2:00 p.m. ET. Economists project a deficit of $40 billion after a shortfall of $20.9 billion reported in March.

In news from the embattled banking sector, Morgan Stanley (MS) is under pressure after the Wall Street Journal reported that the firm is under investigation for underwriting financial instruments and subsequently betting against them, much like in the Goldman Sachs (GS) case.

The major averages have given back some ground in the past few minutes, but they currently remain firmly positive. The Dow is up 78.67 points or 0.7 percent at 10,826.93, the Nasdaq is up 25.52 points or 1.1 percent at 2,400.83 and the S&P 500 is up 8.42 points or 0.7 percent at 1,164.21.

Sector News

Airline stocks are some of the morning's strongest performers, with the NYSE Arca Airline Index posting a gain of 2.7 percent, moving further off of Friday's three-month closing low.

Networking, natural gas, semiconductor and railroad stocks are also seeing similar moves to the upside, as the markets continue to bounce back from recent weakness.

Among other sectors seeing gains, gold stocks are turning in an outstanding performance, driving the NYSE Arca Gold Bugs Index up by 1.4 percent to a more than five-month intraday high.

The sector is benefiting from another surge in the price of the precious metal, which jumped to a record intraday high earlier. Gold for June delivery is currently up $16.90 at $1,237.20 an ounce.

Stocks Driven By Analyst Comments

BPZ Energy (BPZ) is moving notably higher after being upgraded by analysts at Jefferies from Underperform to Hold. The stock has gained 2.9 percent, bouncing off of a ten-month closing low set on Tuesday.

Marshall & Ilsley (MI) is also seeing buying interest after being upgraded at Morgan Stanley from Equal weight to Overweight. Shares are currently up by 1.3 percent but remain stuck between a monthly low and a more than one-year high.

On the other hand, NewAlliance Bancshares (NAL) is under pressure following a downgrade at Morgan Stanley from Equal weight to Underweight. The stock is down by 2 percent, moving back towards a two-month closing low set last week.