Why This Rally May Continue
The markets gapped this morning and are rallying to their fourth gain in a
row,
with earnings responsible for the move. Some investors say the rally may
continue as companies’ results suggest that expectations had fallen too far. About
a third of the S&P 500
companies will be publishing profit reports this week, according to Bloomberg.com.
Two big movers are Citigroup
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Microsoft
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biggest software maker will likely meet or beat earnings forecasts.
More than three stocks rose for every one that fell on the New York Stock
Exchange and the Nasdaq Stock Market. Some 702 million shares traded on the Big
Board, up 19% from a week ago.
Indices are running at or near their best levels of the day while bonds are
at their worst levels in three months. Yesterday, volume in the equities was light due to the bond market
being closed. The inverse relationship is showing today as the equity market is
benefiting from asset-allocation trades out of bonds and into stocks.
The Dec. 10-yr note
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roughly 42 basis points higher from where it was trading when the S&P hit
multi-year lows last Thursday.
Fannie Mae rose $2.77 to $69.25. The largest buyer of mortgages said net
income fell 19% because of a $1.38 billion expense for changes in the market
value of derivatives holdings. Excluding the derivatives expenses, earnings rose
18% to $1.63 billion, or $1.62 a share, topping analysts’
forecasts.
Some of the stronger sectors today include the Semiconductor Index
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today after exchanges close, is trading positive. Other makers of chips and chip
equipment are also advancing. KLA-Tencor
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and Applied Materials
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Airline
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(+6.9%), Retail (+6.8%). Weaker sectors are: Gold & Silver
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(-2.9%), Medical Dev (-1.1%), and Restaurants (-0.4%).
Nasdaq Market Breadth
Adv: 2448 UpVol: 963596200
Dec: 724 DnVol: 56673800
Net: +1724 Net: +906922400
NYSE Market Breadth
Adv: 2455 UpVol: 94676636
Dec: 747 DnVol: 12098460
Net: +1708 Net: +82578176