U.S. MARKET AVERAGES

U.S. stocks slightly advanced at opening as crude oil futures dropped in anticipation of strong petroleum inventory report from the Department of Energy, but lately the market has found it difficult to keep its early advance.

News was mixed Wednesday morning. The Commerce Department said that the U.S. trade deficit unexpectedly rose to an all-time high in October as oil shipments soared and the United States set deficit records with China, Europe, Canada and Mexico. So far this year, the trade deficit is running at an annual rate of $718 billion, far surpassing last year''s $617.6 billion imbalance.

Investors were still digesting the Fed Reserve decision to increase interest rate. In addition, the Fed signaled its cycle of interest rate hikes may be nearing an end. Tuesday''s hike was the Fed''s 13th straight rate increase.

In corporate news, Bear Stearns cut its rating on Apple to peer perform from outperform. Citigroup cut its rating on video game publisher Electronic Arts to hold from buy.

Defense contractor General Dynamics Corp. (GD) agreed to acquire Anteon International Corp. (ANT) for $2.1 billion, or $55.50 per share in order to expand its training and technology services to the U.S. military. The deal includes $100 million debt and is expected to close by the end of the second quarter of 2006.

Boeing Co. (BA) won a $10 billion order from Qantas Airways Ltd. for 65 Boeing 787 Dreamliner jets, with an option for an additional 50 planes.

FPL Group Inc. (FPL), the parent of utility Florida Power and Light, is in advanced talks to acquire Constellation Energy Group Inc. for more than $11 billion.

The decline in treasury yields supported a number of sectors to rise, including the utility sector, with bank stocks also showing modest advances. The housing sector showed strength, despite industry data, showing a decline in mortgage loan application volume.

There were few standouts to the downside in early going. The gold sector dipped at the start of the session, posting only amodest loss.

In the first hour of trading, the Dow Jones industrial average rose 32.34, or 0.3%. The Standard & Poor''s 500 index rose 2.71, or 0.21%, and the Nasdaq composite index rose 1.73, or 0.08%.

The 10-year yield is down 5.3 basis points to 4.482%, moving to the low end of a recent trading range.

MOVERS AND SHAKERS

Apple Computer (AAPL) was downgraded to peer perform from outperform by Bear Stearns on valuation and maintaining estimates. Bear Stearns said the valuation reflects much of the near-term optimism and is 7% above its year-end 2006 fair value. The stock fell 3.4%.

Baidu.com (BIDU), Internet search provider, said it will release a total of up to 3 million outstanding ordinary shares from lock-up restrictions, effective Dec. 19, thus allowing the sale and transfer of shares by shareholders who were subject to the restrictions as of Dec. 2. The stock fell 5%.

SciClone Pharmaceuticals (SCLN) reported mixed results in trials of its Zadaxin drug. SciClone said it and Sigma-Tau S.p.A. have found from interim results from a Phase 2 trial that Zadaxin with dacarbazine chemotherapy showed a dose-dependent response for patients with advanced-stage malignant melanoma. But SciClone said the first Phase III trial of the drug with pegylated interferon alpha didn't show a statistically significant benefit compared with pegylated interferon alone in treating Hepatitis C. Company’s shares slid 39.2%.

Arena Pharmaceuticals Inc. (ARNA) said it had seen positive results from its Phase IIb clinical trial for APD356, its drug candidate for the treatment of obesity. Arena said APD356 was generally well-tolerated at all doses investigated in the trial and there were no apparent effects on heart valves or pulmonary artery pressures. Company’s shares rose 23%.

ECONOMIC NEWS

Crude oil inventories ticked higher in the most recent week, according to government data released Wednesday, adding to a rebound recorded in the previous period. Stocks of gasoline also moved higher.

The Department of Energy's Energy Information Administration revealed that crude oil inventories rose by 900,000 barrels for the week ended December 9, climbing to 321.2 million barrels from the prior week's level of 320.3 million barrels. This followed an advance of 2.7 million barrels in the previous week. Oil inventories were 11.7% higher than their levels of the same time last year.