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CNBC ON DIGG

What's Behind This Rally

Published: Wednesday, 15 Jul 2009 | 1:57 PM ET

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By: Bob Pisani
Reporter

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% [C Loading... ()

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Bank of America up 13% [BAC Loading... ()

]

American Express up 13% [AXP Loading... ()

]

JPMorgan Chase up 12% [JPM Loading... ()

]

Wells Fargo up 11% [WFC Loading... ()

]

Goldman Sachs up 10% [GS Loading... ()

]

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 [COF Loading... () ] 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 [DFS Loading... () ] 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 [AA Loading... () ], Freeport McMoran [FCX Loading... () ] and U.S. Steel [X Loading... () ] 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 [VALE Loading... () ] up 10 percent, Petrobras [PBR Loading... () ] up 5 percent.

Global industrials are also up for a similar reason. General Electric [GE Loading... () ], 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 [CSX Loading... () ] 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 [AMR Loading... () ] beats estimates.

The one laggard: truckers. JB Hunt [JBHT Loading... () ] gave a sour earnings outlook and is down 9 percent; YRC Worldwide [YRCW Loading... () ] down 5 percent, Conway [CNW Loading... () ] 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 [GCI Loading... () ](up 26 percent) and McClatchy [MNI Loading... () ](up 28 percent), New York Times [NYT Loading... () ](up 6 percent) are all up on heavy volume.