(RTTNews) - Stocks are extending their gains in early afternoon trading on Tuesday, as a mix of bargain hunting and speculation that the European Union is crafting a bailout package for Greece has driven buying interest. The major averages are all in positive territory, partly offsetting recent losses.

Speculation of a rescue package for Greece gained momentum as European Central Bank President Jean-Claude Trichet left earlier than expected to attend a European Union leaders’ summit, where the details for the bailout are expected to be drawn up.

On the U.S. economic front today, the Commerce Department released a report showing an unexpected decrease in wholesale inventories in the month of December, although the report also showed a continued increase in wholesale sales during the month.

With earnings season drawing to a close, Coca-Cola (KO) reported fourth quarter earnings that fell short of expectations, while its revenues topped estimates. Pulte Homes Inc. (PHM) reported a fourth quarter loss but was also able to beat revenue forecasts.

In other corporate news, fast food giant McDonald’s Corp. (MCD) announced that global comparable sales for the month of January grew 2.6 percent, driven by the European and Asian markets. Total sales for January rose 9.1 percent, including a 0.1 percent drop in the U.S.

Earlier in the day, Japanese automaker Toyota Motor Corp. (TM) announced the recall of nearly half a million new Prius and other hybrid cars due to problems related to the software program that controls the vehicles’ anti-lock braking system.

The major averages have all seen additional upside in recent trading, reaching new highs for the session. The Dow is currently up 209.42 points or 2.1 percent at 10,117.81, the Nasdaq is up 35.96 points or 1.7 percent at 2,162.01 and the S&P 500 is up 20.01 points or 1.9 percent at 1,076.75.

Sector News

Airline stocks continue to see significant strength in early afternoon trading, as reflected by the 6.2 percent gain by the NYSE Arca Airline Index. UAL Corp. (UAUA), the parent company of United Airlines, is one of the strongest performers in the sector, rising by 15 percent to its best price in fifteen months after a pick-up in January traffic.

Gold and oil service stocks are also advancing by substantial margins, with the NYSE Arca Gold Bugs Index and the Philadelphia Oil Service Sector Index up by 4.8 percent and 4 percent, respectively. The upside has come as gold is up by $14.80 to $1,081 an ounce and oil has risen $0.82 to $72.71 a barrel.

Steel stocks are also notably higher, with the NYSE Arca Steel Index posting gain of 5 percent. The index is being helped by shares of Rio Tinto plc (RTP), which are up by 7.4 percent. With the climb the stock is moving off of yesterday’s three-month closing low.

Natural gas, networking, trucking and defense stocks are also moving significantly higher, contributing to the strong gains being shown by the major averages.

Stocks In The News

Harman International Industries Inc. (HAR) is seeing notable upside in early afternoon trading after the company soundly beat second quarter profit forecasts. The stock has gained 16 percent, jumping to an eighteen-month intraday high.

ADC Telecommunications Inc. (ADCT) is also on the rise after topping first quarter earnings expectations. Shares are currently up by 15.6 percent, climbing to a two and a half-week high as it recovers from the nine-month closing low set in January.

On the other hand, Electronic Arts Inc. (ERTS) is seeing significant selling pressure after the firm revealed a 2011 profit forecast that failed to meet analyst projections. The stock has plummeted by 9.6 percent, sinking to an eleven-month intraday low.

In Focus: Wholesale Trade Data, Earnings

As mentioned above, the Commerce Department reported that wholesale inventories fell by 0.8 percent in December following an upwardly revised 1.6 percent increase in November. Economists had been expecting inventories to increase by 0.5 percent compared to the 1.5 percent increase originally reported for the previous month.

The report also said that wholesale sales increased by 0.8 percent in December after surging up by 3.6 percent in the previous month. The increase reflected a 3.0 percent jump in sales of durable goods.

On the earnings front, Coca-Cola reported fourth quarter earnings of $0.66 per share, just short of the $0.67 per share forecast by analyst. Net revenues for the quarter rose 5 percent to $7.51 billion, topping the consensus revenue estimate of $7.21 billion.

Pulte Homes reported a fourth quarter net loss of $0.31 per share, compared to a net loss of $1.33 per share in the year ago quarter. Consolidated revenue for the quarter rose 5 percent to $1.73 billion. Analysts expected Pulte to report revenues of $1.50 billion.

Other Markets

In overseas trading, stocks markets across the Asia-Pacific region closed mixed on Tuesday. Japan’s Nikkei 225 fell by 0.2 percent, while Hong Kong’s Hang Seng Index gained 1.2 percent.

Meanwhile, the major European markets all posted modest gains. The French CAC 40 and the German DAX Index both gained 0.2 percent, while the U.K.’s FTSE 100 Index rose by 0.4 percent.

In the bond markets, treasuries have moved to the downside in recent trading after showing a lack of direction earlier in the session. Subsequently, the yield on the benchmark ten-year note is currently up 2.6 basis points at 3.618 percent.

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Posted in Categories: Economy, Eurozone, Japan, Releases, USA.

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