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What's Behind This Rally

Don't be fooled--the rally is being fueled by far more than Intel. True, there is genuine momentum buying in semiconductors and semiconductor capital equipment stocks today.

But the S&P 500 is up 5.5 percent this week, one of its best 3-day runs since the March low.

Here are the other sectors that are moving:

1) Financials continue the rally that began on Monday. Multiple upgrades of Goldman Sachs in the wake of its earnings report, but other financials have also rallied strongly in the last 3 days:

Financials This Week

  • Citigroup up 22%
  • Bank of America up 13%
  • American Express up 13%
  • JPMorgan Chase up 12%
  • Wells Fargo up 11%
  • Goldman Sachs up 10%

2) Credit card companies are trading higher as they are reporting Master Trust Data for June. The data, for the most part, is a pleasant surprise. American Express just reported that its annualized charge-offs for its credit cards (debts the company believes it will never collect) actually DROPPED to 10.2 percent from 10.4 percent in May; the dollar value of delinquent accounts also dropped. Earlier, Capital One reported that its charge-offs rose a bit to to 9.73 percent in June, from 9.41 percent in May, but delinquencies were lower.

Amex up 8.8 percent, Capital One up 9.8 percent, Discover up 5.2 percent.

3) The weaker dollar, and the Shanghai Index at a 52-week high are both pushing a rally in commodity stocks.

Big commodity names like Alcoa , Freeport McMoran and U.S. Steel all trading up 4 to 6 percent. The Brazil ETF (EWZ) is up 5.3 percent, with big commodity names there up on heavy volume: Vale up 10 percent, Petrobras up 5 percent.

Global industrials are also up for a similar reason. General Electric, our parent company, is up another 4.4 percent today (12.4 percent this week!). They will report second quarter earnings on Friday; Goldman made positive comments on Monday.

4) Transports are also beneficiaries of the commodity rally. Railroads continue their rally after CSX's strong earnings report; the S&P 500 Railroads Index is up over 9 percent this week.

Separately, airlines are up about 4 percent after AMR beats estimates.

The one laggard: truckers. JB Hunt gave a sour earnings outlook and is down 9 percent; YRC Worldwide down 5 percent, Conway down 2.6 percent

5) Media stocks are strong as Gannett reported earnings better than expected. No one is deluded here: the beat was on cost cutting; ad revenues were down 32 percent, but the company did see "some bright spots" in ad trends for the third quarter.

Gannett(up 26 percent) and McClatchy(up 28 percent), New York Times(up 6 percent) are all up on heavy volume.

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Questions? Comments? tradertalk@cnbc.com

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

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