11:30AM U.S. market averages reversed to gains on rate-cut optimism.

U.S. market averages recovered from earlier weakness although crude oil inventories dropped more than expected and the U.S. dollar hit a record low against the euro. Stocks were also given a boost by continuous optimism that the Fed will cut interest rates at its next monetary policy meeting on Sept. 18th.

The price of oil surged after the petroleum report, reaching a record intraday high of $79.29 a barrel. Airline stocks moved sharply lower on the news, while oil and natural gas stocks posted solid advance. Dow member Exxon Mobil (XOM) advanced nearly 1%. In the metals sector, Aluminum Corp. of China (ACH) dropped 10% after Alcoa (AA) said it sold a stake in the company for HK$15.3 billion ($2.0 billion).

The tech-heavy Nasdaq was pressured by weakness among technology stocks, led by Texas Instruments (TXN), as the world's biggest cell-phone chipmaker fell 1% after tightening its Q3 financial targets. Following the news, cell phone maker Nokia (NOK) slipped 2.7%.

At the same time, medical device maker Cardica Inc. (CRDC) soared 22% after getting a key European approval for one of its devices. Drug maker Merck & Co. Inc. (MRK) weighed on the Dow with a decline of 1.3%. Amgen (AMGN) provided support to the bioteck sector, moving up 4.2% on broker upgrade.

On the economic news front, Mortgage Bankers Association survey showed that mortgage application volume rose 5.5%, refinance volume jumped 6%, and the purchase index increased 5.2%.

The Dow Jones industrial average rose 29.84, or 0.22%, to 13,338.23 after soaring 180 points on Tuesday. The Standard & Poor's 500 index futures rose 5.01, or 0.34% to 1,476.50, and the Nasdaq composite index rose 12.31, or 0.47%, to 2,609.78. Bond prices slipped. The yield on the 10-year Treasury note, which moves opposite its price, rose to 4.40% from 4.37% late Tuesday.

U.S. oil inventories dropped.

Wednesday morning, the Energy Information Administration released its report on U.S. oil inventories in the week ended September 7, showing that crude oil inventories fell much more than analysts had been expecting. The report showed that crude oil inventories fell by 7.1 million barrels to 322.6 million barrels, although they remain above the upper end of the average range for this time of year. Analysts had been expecting a much more modest decrease of about 2.5 million barrels. The EIA, the statistical arm of the Energy Department, noted that crude oil imports averaged over 9.6 million barrels per day last week, down 674,000 barrels per day from the previous week.

Additionally, the report showed that gasoline inventories fell by 700,000 barrels and are well below the lower end of the average range. The drop in gasoline stockpiles came roughly in line with analyst estimates. On the other hand, the EIA said that inventories of distillate fuels, which include heating oil and diesel, increased by 1.8 million barrels, roughly in line with analyst estimates. Distillate fuel inventories are in the upper half of the average range for this time of year. The report also showed that the refineries operated at 90.5 percent of their operable capacity last week, down sharply from 92.1 percent in the previous week. Analysts had expected a much more modest decrease to a 92.0 percent capacity utilization rate.


09:45AM Wall Street opened lower on profit-taking and TI trimmed sales forecast.

Wall Street opened in the negative Wednesday, retreating from notable gains posted yesterday as investors turned to profit taking. With little news to affect the broad market, the focus remained on what the Federal Reserve’s move will be at the central bank policy meeting on Sept. 18. What is widely expected is a reduction of the federal funds rate by 0.25%, although a slumping dollar may prevent the Fed from making such a decision.

Weakness in the shares of Texas Instruments (TXN) also weighed on the sentiment. The chipmaker fell 2.4% after it cut its sales forecast for Q3. At the same time, Amgen (AMGN) led the biotech sector up with a gain of 3% after UBS raised its rating on the biotechnology company to neutral from sell.

Among companies driven by analyst comments, Apache Corp. (APA) climbed 1.6% after Goldman Sachs upgraded the oil and gas producer to buy from neutral. Chip-equipment maker ASML Holdings (ASML) gained 0.3%, following an upgrade to outperform from underperform by Credit Suisse.

In earnings-related news, Pathmark Stores (PTMK) edged down 0.3% after it reported wider Q2 net loss widened. Shares of Dow component Exxon Mobil (XOM) gained 0.3% as oil prices reached $78.20 a barrel. The dollar was also weaker vs. the euro and the yen, but higher versus the pound. Gold prices rose.

The Dow Jones industrial average fell 39.01, or 0.29%, to 13,269.38 after rising 180 points on Tuesday. The Standard & Poor''s 500 index futures fell 5.30, or 0.36%, to 1,466.19, while the Nasdaq composite index fell 6.85, or 0.26%, to 2,590.62.


09:00AM U.S. stock futures pointed lower after yesterday’s rally and weak dollar.

U.S. stock futures indicated a weaker start of Wednesday trading session, reversing from solid gains Tuesday on optimism of interest-rate reduction in the near term, as well as upbeat corporate news from auto maker General Motors (GM) and fast-food retailer McDonald''s Corp (MCD). Record-low levels of the U.S. dollar exerted further pressure on pre-market sentiment. The greenback traded down 0.4% at 113.85 yen, while the euro traded as high as $1.3880.