Why pros are 'banking' the rally will continue
As the stock market advanced near all-time highs on Monday, professional traders said it's the strength in the financial sector that could send stocks even higher.
Early results from financial companies have been largely positive. Citigroup, Wells Fargo and JPMorgan Chase posted profits that beat forecasts, though JPMorgan said it might be forced to accelerate cost-cutting because of difficult market conditions. Looking ahead, the sector is seen posting profit growth of 19.6 percent in the quarter, by far the highest among S&P groups, Reuters reported.
The strong earnings and movement in the bank stocks is only validating the broader rally, CNBC's Jim Cramer said Monday on "Squawk on the Street." That viewpoint was shared by other pro traders who appeared on CNBC Monday.
To "Fast Money" trader Stephen Weiss, the results from financial companies "sets a positive tone" for the greater market. He likes the financial sector, especially Citi and the Financial Select Sector SPDR exchange-traded fund.
"I'm looking for some blowout numbers out of Goldman tomorrow," options trader Jon Najarian said from the Chicago Board Options Exchange. "We'll see whether or not that plays out, but I think Goldman is poised to really surprise us tomorrow morning in a positive way."
In Weiss' opinion, Goldman Sachs is by far "the gold standard in the business."
Terranova, too, is long GS, but he also likes Morgan Stanley. Morgan showed an "incredible display of confidence" when it recently raised margin guidance, he said. In turn, he thinks the stock could go to $30 a share.
—Reuters contributed to this report.
Following are disclosures for the "Fast Money Halftime Report" traders on July 15, 2013:
STEPHANIE LINK: Stephanie Link is long AAPL, JPM, WFC, CSCO, EBAY and FB. SIMON BAKER: Simon Baker is long AAPL, GS, MSFT, GOOG, EBAY, DELL, C, JPM and CIEN. STEVE WEISS: Steve Weiss is long BAC, C, M, SODA, F, ETN, EWW, MLI, AAMRQ and DAL. JOE TERRANOVA: Joe Terranova is long VRTS, TRV, GS, EMC, AXP, OXY, HRC. Joe Terranova is long crude oil futures.