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Updated from 9:56 a.m. EDT

U.S. stocks searched for direction at the open Wednesday but were recently gaining ground as an encouraging report on durable goods orders helped quell fears of a backsliding economy, but oil prices were ticking higher and investors fretted about the opaque future of the financial sector.


Dow Jones Industrial Average

was climbing 69 points to 11,481, while the

S&P 500

was gaining 7.5 points to 1279. The


edged up 14 points to 2376.

Traders looked to be taking heart from the Census Bureau's read on durable goods. The agency said orders rose 1.3% in July, well ahead of economists' forecasts for zero growth. Excluding transportation-related products, the figure increased 0.7%, whereas analysts were expecting a 0.7% decline.

"Durable goods orders increased more than expected in July, but the increase may have more to do with special factors than any improvement in underlying trends in the economy," wrote Tony Crescenzi, chief bond market strategist at Miller Tabak and contributor to's

sister site,

. Crescenzi wrote that the boost in goods orders factors in price increases in primary metals, an increase not reflected in the Census Bureau's data.

Furthermore, Crescenzi wrote, the Economic Stimulus Act of 2008 was probably responsible for an increase of about $1.4 billion in machinery orders, as the law gave companies additional depreciation on equipment bought in 2008 and increased small businesses' expensing limits. Crescenzi also noted that capital expenditures may be a sign that businesses are trying to improve efficiency and thus rein in costs.

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In the previous trading session, stocks traded in choppy fashion to rise in the final hour and close Tuesday narrowly mixed. The Federal Deposit Insurance Corp. reported Tuesday that the banks and thrifts it insures recorded markedly low earnings in the most recent quarter and the

number of banks on its so-called problem list jumped 30%


Before the start of the new day's trading, a

Wall Street Journal

Report said FDIC chairwoman Sheila Bair said her agency may need to take a line of credit with the Treasury to help with its short-term capital levels as it copes with an increasing probability of more bank failures.

Separately, the Federal Housing Administration said it would increase the price of its insurance of mortgages to 1.75% of the loan amount from 1.5%. The new rate takes effect on Oct. 1. And early Wednesday the Mortgage Bankers Association reported a week-over-week rise of 0.5% in mortgage applications for the week ended Aug. 22.

Following Tuesday's close, Standard & Poor's downgraded its ratings on

Fannie Mae

( FNM) preferred stock and credit. The government-sponsored mortgage company and its sister,

Freddie Mac

( FRE) have contributed substantially to recent market angst as traders have weighed the possibility that the pair faces a government takeover.

Economists at Societe Generale offered a hint as to the extent the financial sector's exposure to Fannie and Freddie, estimating that U.S. commercial banks own $1 trillion in debt from Fannie or Freddie, a figure that amounts to 9% of the commercial banks' balance sheets.

In one bright spot for the twin agencies,


reported that Fannie and Freddie's profit from new investments is at 10-year highs, easing the possibility that the Treasury will need to nationalize them.

Meanwhile, the

Financial Times

reported that pummeled brokerage

Lehman Brothers

( LEH) has three private equity firms in contention to buy its asset-management segment.

Another troubled financial institution,


( BKUNA), which faces pressure from federal regulators to raise $400 million in capital, caught a Stifel Nicolaus downgrade to sell from hold.

Outside the financials,

IKON Office Solutions

( IKN) said its supplier, Japan's Ricoh, would buy the office-machinery supplier for $1.62 billion, or $17.25 a share, well above Ikon's Tuesday closing price of $15.56.

Integrated oil company


(COP) - Get ConocoPhillips Report

looks ready to sell the rest of its gas stations to PetroSun West for $800 million, according to a report in the



In other analyst actions, Robert W. Baird downgraded or reduced price targets on a variety of manufacturers including


(TEN) - Get Tenneco Inc. Class A Report



(LEA) - Get Lear Corporation Report


American Axle

(AXL) - Get American Axle & Manufacturing Holdings, Inc. Report


The Energy Information Administration announced that crude-oil inventories declined by 177,000 barrels. Gasoline inventories also decreased slightly. Unease about supply has recently increased as Tropical Storm Gustav menaces oil production in the Gulf of Mexico.

Crude oil was lately gaining $2.03 to $118.30 a barrel. Gold was up $2.30 to $830.40.

Longer-dated U.S. Treasuries were declining. The 10-year was down 12/32 in price to yield 3.82%, and the 30-year was 20/32 lower, yielding 4.42%. The dollar was softening vs. the euro and the pound but gaining on the yen.

Foreign markets were uneven. The FTSE in London and the Hang Seng in Hong Kong were gaining ground, while the Dax in Frankfurt and the Nikkei in Japan were edging lower.