U.S. MARKET AVERAGES

Stocks started Wednesday session in the positive, failing to sustain the initial advance in the course of trading, but later gained ground on expectations of increased demand for heavy industrial products after jet maker Boeing Co. announced a $10 billion order and aerospace conglomerate Honeywell International Inc. forecast higher 2006 earnings. However, tech shares were under pressure following rating downgrades on Apple Computer Inc. Another drag on the Nasdaq index was Microsoft Corp. as the software maker warned users of its Windows operating system of a 'critical' security flaw in its software that could allow attackers to take complete control of a computer.

On the economic news front, the Commerce Department said that the U.S. trade deficit in October unexpectedly rose to an all-time high of 4.4% to $68.9 billion as oil shipments soared and the United States set deficit records with China, Europe, Canada and Mexico. A report, released by the Energy Department showed an increase in oil inventories by 900,000 barrels, following an advance of 2.7 million the previous week week.

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.

Two Wall Street firms downgraded shares of Apple Computers (AAPL: chart), saying a recent rally has over inflated the iPod maker''s stock. Bear Stearns downgraded Apple shares to ‘peer perform’ from ‘outperform’. Similarly, Banc of America downgraded Apple shares to ‘neutral’ from ‘buy’.

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

Defense contractor General Dynamics Corp. (GD: chart) agreed to acquire Anteon International Corp. (ANT: chart) 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.

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

The biotech sector stepped off its intraday low, currently posting a loss of a little less than 1%. The computer hardware sector also showed a modest loss.

The airline sector steadily advanced in early going after three consecutive sessions of decline to climb as high as 1.2%. Housing and utility stocks remained notable movers to the upside. In the energy group the oil and oil service sectors posted modest gains.

Boeing (BA: chart) was the most conspicuous gainer hitting a new 52-week high. Anteon (ANT: chart) jumped to a new high on a deal to be acquired by General Dynamics (GD: chart). Cephalon (CEPH: chart) expanded its high, adding to last-week gains. Nokia (NOK: chart) moved to a fresh peak as well.

Invacare (IVC: chart) broke to a new 52-week low on lowered earnings guidance for the fourth quarter. Deswell Industries (DSWL: chart) dropped sharply, moving to a new low on Q2 earnings report.

The Dow Jones industrial average was up 40.82 points, or 0.38%. The Standard & Poor's 500 Index was up 2.42 points, or 0.19%. The technology-laced Nasdaq Composite Index was down 6.55 points, or 0.29%.

MOVERS AND SHAKERS

Apple Computer (AAPL: chart) 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%.

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%.

SciClone Pharmaceuticals (SCLN: chart) 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%.

Baidu.com (BIDU: chart), 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%.

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.