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Friday Preview: Bulls Could Rule for a Couple More Days

Bulls could rule Wall Street for another couple of days.

Photo: Oliver Quillia for CNBC.com

Stocks rallied broadly Thursday after the Treasury's 7-year note auction delivered much improved results after the disappointing 5-year auction Wednesday. Morgan Stanley interest rate strategists, in a note, said the positive results take the fear of a failed auction off the table. The concern of oversupply spooked the Treasury market Wednesday.

The Dow finished up 174, or 2.3 percent at 7924, but the standout was the Nasdaq, now positive for the year with a 0.63 percent gain. Fired up by tech, the index closed up 3.8 percent at 1587. The S&P 500 was up 18, or 2.3 percent, at 832. The S&P industrial sector was the best performer, up 5 percent, followed by tech, which rose 4 percent.

Traders say the stock market's recent rally has had its life extended by end-of-quarter window dressing, as big investors increase their exposure to stocks. Many think the buying interest could fade as March comes to a close. "Let's get the end of the first quarter out of the way. What I want to see is if there is a continued appetite for stocks," said Tim Smalls of Execution LLC. "What I'd love to see is some stability in the market and more buyers coming in. I don't have to see a big rally. I want to see more players involved."

Data due Friday includes personal income for February at 8:30 a.m. and consumer sentiment for March at 9:55 a.m. Smalls said the economic data is important, but since the Administration's bailout plan was announced Monday, it is less important. "I don't think the market is as fearful of these things now as they were two weeks ago. You had no net under the high wire a couple of weeks ago," he said.

President Obama Friday hosts a midday meeting with the heads of the biggest banks. Obama's meeting comes a day after Treasury Secretary Tim Geithner unveiled a sweeping regulatory plan that would bring hedge funds and derivatives trading under much closer government supervision, among other moves.

Geithner unveiled the plan before the House Financial Services Committee. ""The market is rewarding the Administration for giving them answers...That hearing with Geithner was more like a lovefest. What a far cry from last week. There were no tough questions," said Smalls.

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The Securities Industry and Financial Markets Association, an industry trade group, said it had been advocating many of the ideas in Geithner's plan, such as a systemic risk regulator, additional international coordination and broader regulation including resolution authority for non banks. Obama's meeting with the banks also comes just ahead of next week's G20 meeting in London.

Oil Drill

Inflation-wary traders have been keeping an eye on the move up in oil and other commodities. Oil rose $1.57 per barrel to $54.34 Thursday. The energy sector was up just under 1 percent but is up nearly 7 percent for the week. The commodities-driven materials stocks were up nearly 4 percent Thursday and are the second best performer for the quarter, after technology. The group is up 3 percent since the beginning of the year.

Cambridge Energy Research, in a report released Thursday, warned that the lack of investment in oil and gas production that came with the sharp drop in oil prices, could in fact set the market up for its next spike.

From 'Mad Money':

Questions? Comments? marketinsider@cnbc.com

  • Patti Domm

    Patti Domm is CNBC Executive Editor, News, responsible for news coverage of the markets and economy.

  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

  • CNBC's Senior Personal Finance Correspondent

  • JeeYeon Park is a writer for CNBC.com. Follow her on Twitter: @JeeYeonParkCNBC

  • Rick Santelli joined CNBC Business News as an on-air editor in 1999, reporting live from the floor of the Chicago Board of Trade.

  • Senior Producer at CNBC's Breaking News Desk.