Airlines fly high!!!

Markets had a big rally day, recovering yesterday's large loss. Dow was up a big 266, advancers over decliners 3-1 (a little tepid) while NAZ rose 55. Volume on NYSE was 1.4B, good but not great. Airlines & banks led the broad advance. American Airlines (AMR) was up 19%, an airline leader but typical of the group. Of course it's easier for a low priced stock to achieve such a gain. Banks roared ahead (courtesy of Bloomberg):

S&P 500 FINANCIALS INDEX

Value 287.37......Change 20.03.....Change +7.5%

This index may be heading back for last week's 302 interim high.

Other stocks participated in the rally. US Steel (X), a former Dow stock, gained over 20 on record profits. Colgate-Palmolive (CL) rose 5½ on a very good earnings report. Oversold REITs did very well. Even junk bond funds "leaped" maybe 1% from their depths, still yielding 12%.

The largest single factor in the gains was the price of oil dropping another 2½ to 122:

CLU08.NYM......Crude Oil Sep 08......$122.20.....down--2.53 (2.03%)

This is the lowest price in almost 2 months. Oil stocks in anticipation of excellent earnings inched up a little. However, the Alerian MLP index dropped 2 to 266 hovering near the 262 resistance level. MLPs continue as another group finding it tough to get respect.

This was a very confusing day for me. Merrill Lynch (MER) reported ugly news on its finances & Citigroup (C) is getting ready for another big write-off. Each was rewarded with nice gains, MER up 2 & C up 1+. That's the kind of the day it was. More macro economic reports are expected later this week along with earnings from the major oil companies.