NEW YORK ( TheStreet) -- The major market averages recaptured a portion of their prior day's losses Wednesday afternoon even as another ratings downgrade in the eurozone kept sovereign debt worries in the headlines, though the Federal Open Market Committee made no move on its key interest rate.

The Dow added 53 points, or 0.5%, to 11,045. The S&P 500 gained 8 points, or 0.7%, to 1191, though the Nasdaq went ahead by only a fraction of a point, or 0.01%, at 2472.

Hewlett-Packard ( HPQ) made news after the closing bell, announcing it will acquire Palm ( PALM) for $1.2 billion, according to a release. Palm shareholders will get $5.70 a share, or a 23% bump over Wednesday's closing price, while it's believed the deal will close during HP's third quarter. After a momentary halt in trading, shares of Palm were climbing 27% higher in the extended trading session.

S&P lowered Spain's credit rating by one notch to AA, from AA+ with a negative outlook Wednesday, a day after downgrades to Greece and Portugal triggered a global selloff as investors feared a worsening eurozone debt crisis.

Overseas, Hong Kong's Hang Seng lost 1.5%, and Japan's Nikkei fell 2.6%. The FTSE in London slipped 0.3%, and the DAX in Frankfurt lost 1.2%.

Stocks faltered after news of the downgrade surfaced but stocks resumed higher with the Dow climbing solidly into positive territory, which Lawrence Creatura, vice president and portfolio manager at Federated Clover Investment Advisors, credited to a reporting season characterized by good earnings and even better outlooks.

"Another thing that may be going on is capital may be departing Europe as anxiety over European contagion increases -- that could be another positive factor for markets," Creatura added.

But Ryan Detrick, senior technical strategist at Schaeffer's Investment Research, was less enthused about the mild uptick in most stocks, noting the heavy 200-point Dow drop on Tuesday along with today's light trading volumes.

"Yes, we shook off the Spain news, but I don't think it was the world's most impressive bounce," he said. "The Fed didn't rock the boat, so to speak, which is another positive. But the bigger picture for me: I don't think it's that impressive considering the steep drop we saw yesterday."

The Economy

The Energy Information Administration said crude oil inventories added 1.9 million barrels in the week ended April 23, which was slightly higher than the 1.4 million barrel build that analysts polled by Platts had been expecting, but less than the increase of 5.34 million barrels reported by the American Petroleum Institute on Tuesday. Gasoline stockpiles unexpectedly shed 1.9 million barrels, dashing analysts' projections for a gain of 500,000 barrels. Distillates supplies, however, showed another 2.9 million barrels, which was higher than the 1.2 million barrel rise expected by analysts.

The Federal Reserve's rate-setting arm wrapped up its two-day meeting with the release of its fed funds rate announcement, which they kept unchanged at near zero. The policymakers highlighted a pick-up in spending, though cited job losses, modest salary bumps and constrained credit as continuing headwinds. The group continued its now familiar language on rates, saying they would stay at "exceptionally low levels... for an extended period," though Kansas City Fed President Thomas Hoenig dissented, again, from that characterization.

Senate Democrats couldn't muster the requisite 60 votes needed to break a Republican filibuster concerning financial reform legislation, stalling the bill's movement by keeping it off the floor for debate.
Federal Reserve Chairman Ben Bernanke

Company News

Visa ( V), like other credit card firms before it this earnings season, beat profit estimates by a nickel after the closing bell at 96 cents a share on a better-than-expected jump in payment volume. Visa posted 71 cents a share in the year-earlier quarter.

Solar panel maker First Solar ( FSLR) also topped estimates late Wednesday, and guided higher for the year. Shares were gaining 6.7% in the after-hours session after slipping 0.2% in the afternoon.

Sprint Nextel ( S) reported a first-quarter loss of 29 cents a share in the morning and said it expects both post-paid and total subscriber losses to narrow in 2010 as it introduces new devices. Sprint shares improved 4.2%.

Comcast's ( CMCSA) stock closed 35 cents higher, or 1.9%, to $18.81 after the cable company said spending cuts and modest sales growth helped top analysts' first-quarter profit estimates by a penny.

Hess ( HES) soared past analysts' estimates with first-quarter earnings of $1.65 a share on sales of $9.2 billion. Earlier,

Royal Dutch Shell ( RDS.A) credited a 57% surge in first-quarter earnings to higher oil prices and improved production.

Shares of Dow Chemical ( DOW) rose by 5.9% after the company reported better-than-expected earnings for the first quarter and said it is seeing improved consumer spending on cars, electronics and appliances.

Northrop Grumman ( NOC) and General Dynamics ( GD) also reported better-than-expected first-quarter earnings. Their shares gained 2.2% and 0.6%, respectively.

Health benefits company WellPoint ( WLP) said earnings jumped 51% in the first quarter even as membership fell 2.1% year over year.

Medco Health Solutions ( MHS), a pharmacy benefits manager, beat earnings estimates and reaffirmed its full-year guidance, highlighted by strong first-quarter volumes. But shares traded 3.9% lower on gross margin concerns, Reuters reported.

Honda ( HMC) said strong demand from China and India helped it post a profit of 72 billion yen ($774 million) for the January-March quarter.

Toyota ( TM) issued another recall today, this time for some 50,000 Toyota Sequoia SUV's from the 2003 model-year. The recall was announced because of stability-control system issues. Toyota declined by 0.2% to close at $76.84.

Commodities and the Dollar

Following the government inventory report, the June delivery crude oil contract settled at $83.22 a barrel, or 78 cents higher.

Elsewhere in commodity markets, the June gold contract gained $9.60 to settle at $1,171.80 an ounce.

The dollar was recently trading lower against a basket of currencies, with the dollar index down by 0.1%.


The benchmark 10-year Treasury weakened 19/32, lifting the yield to 3.765%.

The two-year note slipped 2/32, increasing the yield to 1.032%. The 30-year bond fell 24/32, raising the yield to 4.626%.

--Written by Melinda Peer and Sung Moss in New York.

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