Evidence is accumulating that the U.S. economy is improving, and that may be the biggest ally the stock market rally has.
The ADP report released on Wednesday showed the biggest jump in private payrolls since November 2012. Meanwhile, the June ISM report yesterday showed an increase in new orders, and new and existing home sales figures has been stronger as well.
Auto sales are robust. This morning ISI noted that its truckers survey, which they say has the highest correlation with GDP, ticked up to its highest level since December 2005.
Yet consumer spending is still modest, underscoring the need for more hiring. Companies are waiting for hard evidence that the economy really is improving before they will start.
Marisa Di Natale, a director at Moody's Analytics, told Bloomberg that employment may be headed for a "breakout year." Moody's is forecasting job growth of 1.8 percent this year, the highest since 2005.
This has ignited the usual concerns about inflation, and indeed the 10-year Treasury yield moved up about 4 basis points to 2.60 percent this morning. On Tuesday, I made the observation that I'd gladly trade higher interest rates for a strong employment number. Stock investors will probably feel the same way, and it appears they do: blue chips posted gains in early dealings.
If rates jump modestly, meaning the 10-year goes from 2.5 percent to 3.0 percent by the end of the year, there is no reason the market should have a big problem with that. I'm not even sure rates at 3.5 percent would be a problem if we had really robust economic growth, somewhere around 4 percent.
Finally, much was made yesterday that the S&P 500 has now notched six consecutive quarters of growth, which has only happened six times since 1928. Don't bet against the trend: according to Bespoke, five times out of six, the S&P was up the following quarter as well.
On the policymaker's front, Federal Reserve Chair Janet Yellen speaks today at the IMF conference.
--By CNBC's Bob Pisani