U.S. MARKET AVERAGES

Stocks have been trading in a lackluster fashion throughout the morning session, unable to sustain the higher sentiment at opening. Exhausted from the month-long rally and deprived of significant news, the three major averages edged lower during most of the morning.

The only significant data Wednesday was news on oil inventories. Oil stocks turned lower at midday Wednesday after the government inventory report showed gains in U.S. petroleum and product supplies. According to the latest report, crude, distillates and gasoline supplies each rose 2.7 million barrels in the week ended Dec. 2.

The housing sector was among the worst performers throughout the morning, with a decline of 1.5%. The HMO sector also weakened in morning trading, falling by 1.4% and coming off a multi-year high. Biotech, semiconductor and bank stocks also posted noteworthy losses.

The gold sector climbed steadily through the first hour of trading, currently posting a gain of about 2.5% above the flat line. Airline stocks declined in the first hour of Wednesday''s trading, but a slip in oil prices prompted an airline rally during the second half of the morning. The sector is now showing a modest advance.

Nuance Communications (NUAN: chart) jumped to a new 52-week high on earnings release. AMR (AMR: chart) added gains to extend its peak. Newmont Mining (NEM: chart) set a new high after rallying yesterday.

NitroMed (NTMD: chart) dropped more than 5% on Wednesday, reaching a new 52-week low. Microvision (MVIS: chart) iextended a recent downtrend to set a fresh low.

Bonds rose, with the yield on the 10-year Treasury note falling to 4.52 percent from 4.48 percent late Tuesday.

MOVERS AND SHAKERS

Cisco Systems (CSCO: chart) reaffirmed its long-term growth forecast. Consequently, J.P. Morgan upgraded the company from neutral to overweight. The stock rose 2.4%.

SigmaTel (SGTL: chart) was downgraded to peer perform from outperform on evidence that the company''s fourth-quarter is tracking toward the low end of expectations and even lower due to increased competition, weaker demand, and market pressure from Apple. Company’s shares dropped 8.4%.

SimpleTech Inc (STEC: chart), memory chip maker, cut its fourth-quarter revenue forecast and said earnings per share will come below its previous outlook. The company sees its revenue in the range of $60 million to $63 million, compared with its previous outlook of $70 million. The stock slid 9.7%.

ECONOMIC NEWS

Coming back from the previous week''s sharp declines, crude oil inventories advanced in the latest week, according to government data released Wednesday. Stocks of gasoline also moved higher.

The Department of Energy''s Energy Information Administration revealed that crude oil inventories rose by 2.7 million barrels for the week ended December 2, climbing to 320.3 million barrels from the prior week''s level of 317.6 million barrels. This followed a decline of 4.2 million barrels in the previous week. Oil inventories were 11.1% higher than their levels of the same time last year.

Gasoline inventories also posted a week-over-week advance of 2.7 million barrels, the government said, compared to the previous week''s 500,000-barrel slide. Gasoline stocks were 4.3% below their levels of last year. Inventories of distillate fuel oil rose by 2.7 million barrels as well in the most recent week.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks closed higher, supported by U.S. markets gains overnight. The Nikkei helped the upside momentum, recovering from yesterday’s losses and rising 0.4% ahead of economic data Friday. Across the region Indonesian Jakarta Composite surged 2.5%, Hong Kong’s Hang Seng rose 1%, while South Korea’s Kospi gained 0.3%, reaching a new high on tech stocks.

European markets finished mixed as gains from metals and telecoms stocks offset losses in automakers and insurance shares. The German DAX 30 slipped 0.3%, the French CAC 40 closed flat, while London’s FTSE 100 added 0.1%.

OIL, METALS, CURRENCIES