Stocks are back in rally mode Wednesday, after U.S. productivity numbers came in stronger than expected. At midday, traders have pushed the S&P/TSX index 44 points higher to 6,975.

Volume is very strong at 140.4 million shares, with the buying swamping the selling by about four to one. Market breadth is bullish, but much narrower, as winners outnumber losers five to four.

The buying remains fairly broad-based, with most TSX sectors at least modestly higher at midday. The utilities are the only group showing any real weakness.

Techs are leading the way higher, up almost 2%. There is also strength in financials, health care stocks and diversifieds.

Nortel is leading the tech rally, and dominating the volume, gaining 1.2% on huge volume of 38.6 million shares. The bigger gains in the sector are due to smaller names such as Tundra Semiconductor, which has gained almost 15% in strong action. There is also strength in Telesystem International Wireless, Celestica and Research in Motion.

The financials are also bolstering the trade today, led by a 1.5% recovery in Royal Bank stock. Elsewhere, CIBC is 1.3% higher, and TD Bank is up 1.6%. Scotia is up less than 1%. On the insurance side, Fairfax is up another 8.5% in heavy trading.

Baytex Energy has added almost 8% on reports that it intends to convert to an income trust later this year. But the strength isn’t widespread in energy stocks, with weakness coming in names such as EnCana, Petrobank, Paramount Energy, Focus Energy Trust, Viking Energy and Transalta.

Stelco is a strong gainer today, up 8.4% in active trading. Other winners include Forzani and Vasogen.

There is weakness in Cott, Teknion, Magna International, Meridian Gold and Lionore Mining.

In earnings news, MDS reported its second quarter financial results. It recorded a 27¢ loss per share in the quarter.

San Francisco Boutiques recorded a net loss for the first quarter of $2.5 million, compared with $1.2 million in the first quarter of 2002.

Reitmans (Canada) Ltd. reported that its net earnings reached $4.1 million in its latest quarter. That’s down 20% from last year.

In New York, more strong news on the economy has traders buying once again. Traders are generally ignoring the spectacle of Martha Stewart surrendering for an arraignment in New York on possible obstruction of justice charges related to the ImClone insider trading scandal.

The U.S. Labor Department said this morning that first-quarter productivity was higher than previously thought.

Non-farm business productivity grew at an annual rate of 1.9% from January through March — three-tenths of a percentage point more than initially estimated.

The Dow Jones industrial is up 70 points at midday to 8,993. The S&P 500 is eight points higher to 979. The Nasdaq composite index is up 14 points to 1,618.

The small caps are ignoring the bulls once again, trading the S&P/TSX Venture index down five points to 1,085. Volume is fairly robust there too at 20 million shares. Photochannel Networks is the day’s top trader, down half a cent to 9¢ on almost 1.9 million shares traded.