U.S. MARKET AVERAGES

U.S. stock markets advanced Wednesday, breaking the recent lackluster pattern of trading. Socks were strongly supported by a great amount of merger-and-acquisition news, robust earnings from FedEx, and upbeat third-quarter GDP data which eased inflation concerns.

The Commerce Department released a downward revision of GDP for the third quarter which showed that he U.S. economy grew at fastest pace in a year and a half. The third-quarter GDP rose at an annual rate of 4.1%, despite surging oil prices and hurricanes, following a 3.3% rise in Q2.Economists had been expecting a 4.3% increase in July –September industrial output.

Acquisitions in the technology and pharmaceutical industries promised to inject strength to lagging sectors. Google Inc., Seagate Technologies and IBM Corp. announced major purchases, while Allergan Inc. said it will buy Inamed Corp.

Allergan Inc. agreed to pay more than $3 billion for Inamed Corp., offering a deal that topped Medicis Pharmaceutical Corp.''s first bid.

Seagate Technology offered $1.9 billion in shares for Maxtor Corp., a hard disk making rival, that values each share at a 60% premium to Tuesday''s close. This came after Google and Time Warner finally announced their AOL deal, with Google taking a $1 billion stake in the America Online unit.

Arden Realty Inc., a real estate investment trust valued at more than $3.1 billion, is near a deal to be bought by General Electric Co. and other investors.

Disk drive stocks advanced through much of the morning to post a gain of 6.6%, moving to a new multi-year high. The Dow Jones Transportation Average gained 2.5% rising to a new all-time peak.

The biotech sector rebounded from early-week losses to rise by 1.8%. The airline group was also strong, posting a gain of 1.7%.

AIG (AIG) climbed 2% to stand out among the Dow components. Caterpillar (CAT), DuPont (DD), McDonald''s (MCD) and Pfizer (PFE) showed significant strength as well, each climbing by more than 1.5%. IBM (IBM) rose about 1.7% on its deal to acquire Micromuse (MUSE).

There were only 2 blue chips posting losses on the day, AT&T (T) and Microsoft (MSFT).

In late morning trading, the Dow Jones industrial average rose 77.00, or 0.71%. The Standard & Poor''s 500 index climbed 8.66, or 0.69%, while the Nasdaq composite index added 15.94, or 0.72%.

Bonds continued the previous session''s selloff, with the yield on the 10-year Treasury note rising to 4.49% from 4.47% late Tuesday.

MOVERS AND SHAKERS

Seagate Technology (STX) agreed to offer $1.9 billion of its shares for rival hard disk maker Maxtor Corp (MXO) in a deal expected to lift earnings by 20% in the first year after completion. Seagate said it expects revenue attrition, but sees $300 million in annual operating expenses from greater scale, reduced supply chain costs, and combined R&D efforts. Seagate also reaffirmed December and fiscal 2006 guidance. Maxtor’s shares climbed 48%.

Shipping company FedEx Corp (( FDX)) reported second-quarter 33% jump in profit of $1.53 per share vs. $1.15 a year ago on 10% revenue growth, easily beating its own and Wall Street's expectations. The strong quarterly results are due to higher demand for its services and lower advertising costs. The stock rose 3.2%.

Family Dollar Stores (FDO) reported Q1 profit of $51.4 million, or 32 cents a share, from $54.4 million, or 32 cents, a year ago, beating estimates of 31 cents a share. Earnings per share remained flat despite the decline in net income because there were fewer shares outstanding. Sales advanced to $1.51 billion from $1.38 billion in last year''s first quarter. The discount retailer forecast Q2 earnings of 45 cents to 50 cents a share and full-year earnings at $1.30 to $1.39 a share. Company’s shares rose 3.8%.

GSI Group Inc (GSIG) , a supplier of precision motion components, lasers and laser systems said that it authorized a stock repurchase program of up to 1.5 million shares. GSI shares rose 2.9%.
Nike Inc. (NKE) , footwear and apparel company, reported Q2 profit rise of 15%, or $1.14 a share, up from 97 cents in the year-ago period on 10% revenue growth, beating estimates by 11 cents a share, but the company also reported a sharp slowdown in orders scheduled for future delivery. The stock dropped 5.2%.

ECONOMIC NEWS

Crude oil inventories recorded another build in the latest week, according to government statistics released Wednesday, but stocks of gasoline and distillate fuel oil experienced a draw down.