Rally Drives Best Day for Stocks This Quarter

Opinions on the rally are all over the map:

1) it's an options squeeze

2) hedge funds have been caught short

But others note that this is the first time we have seen a string of positive pieces of news...from Intel, Goldman Sachs, CSX, credit cards. Remember the bull thesis: that dramatic cost-cutting means any signs of topline improvement will translate more effectively to the bottom line.

One complaint: volume is light!

Still, the good news is the rally is being fueled by far more than Intel . True, there is genuine momentum buying in semiconductors and semiconductor capital equipment stocks today, with big volume in ETFs around technology.

But the S&P 500 is up 6 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 23%
• American Express up 18%
• Bank of America up 14%
• JPMorgan Chase up 13%
• 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 12 percent, Capital One up 12 percent, Discover up 7 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 5 to 8 percent. The Brazil ETF (EWZ) is up 6 percent, with big commodity names there up on heavy volume: Vale up 10 percent, Petrobras up 6 percent.

Global industrials are also up for a similar reason. General Electric, our parent company, is up almost another 5 percent today (up 13 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 11 percent this week.

Separately, airlines are up nearly 6 percent after AMR beats estimates.

The one laggard: truckers. JB Hunt gave a sour earnings outlook and is down 10 percent; YRC Worldwide down almost 6 percent, Conway down 2 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 28 percent) and McClatchy (up 28 percent), New York Times (up 8 percent) are all up on heavy volume. 

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• The Dow 30 in Real Time
• Pros Say: A Bull Run By Autumn
• Art Cashin: The 'Super-Rally' Scenario Now
• Fed Sees Economy Improving But Joblessness at Over 10%
• The CNBC Stock Blog

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