Bulls Take Control

Enough of this mincing around — the bull is back. Stocks posted their strongest session since the first trading day of the year, establishing fresh two-year highs and reinvigorating a runup that began six weeks ago. The Dow Jones Industrial Average rose 84 points to 11,755, as 22 of its 30 components were in the green — JP Morgan (NYSE: JPM ) gained 2.6%, Bank of America (NYSE: BAC ) rose 2%, and Boeing (NYSE: BA ) climbed 1.7%. That financials theme was no coincidence as banks had a strong day. The SPDR Financial Select Sector (NYSE: XLF ) exchange-traded fund broke out by 1.9% to post its highest finish of 2011, while the SPDR KBW Regional Banking (NYSE: KRE ) ETF closed at its highest level since last Thursday. The Nasdaq added 21 points to 2737, while the S&P 500 rose 11 points to 1286. With Wednesday’s strong performance, the uptrend in equity markets is very much alive. The S&P 500 is now up nearly 23% since Aug. 31, and has now jumped 9% since the beginning of December. For bears, the cries of “How much longer can this continue?” grow fainter with each push higher. The sunny mood was present early Wednesday, following reports from Europe of successful debt auctions by Germany and Portugal, the latter country’s fate being particularly important given recent default fears. That somebody(s) is still snapping up Portugal debt was a green light for the risk-on trade to get back into gear. Commodities finished higher, with oil closing near $92 a barrel. The precious metal trade took the day off with both gold and silver inching up 0.1%. Bonds sold off modestly, bringing the yield on the 10-year Treasuries back to 3.36% and remaining locked in a range they’ve been in since early December. Wednesday also saw the release of the Fed’s Beige Book report, which effectively supported the idea that an economic recovery continues to grind along across the U.S., except when considering real estate or the job market. But a 9% stock-market gain in six weeks covers up many real or imagined economic cracks.
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