S&P 500 Moves Positive On the Year, Up 36% From March Lows

With today's strong stock rally, the S&P 500 is now positive on the year after trading down as much as 25% just in March. Positive pending home sales data, showing a 3.2% increase in March and the first two months of gains in nearly a year, and hopes for the embattled banking sector, helped lift spirits and allowed the rally to continue. Illustrating the massive rally off the bottom, the S&P 500 is now up 36% from its March 9 intra-day low of 666.79.

Bank stocks continued to surge in the face of leaks and rumors about the results of the government's stress tests. Today, Bank of America (NYSE: BAC) refuted reports that it is seeking to raise $10 billion in cash to shore up its balance sheet - its shares surged 19%. The 10% upside move in the Financial Select Sector SPDR (NYSE: XLF) reflected the broad-based move in the sector today. Investors have become aware that six or more banks may need to raise more capital as a results of the stress test, but continue to buy the banks shares on hopes of a housing recovery and economic recovery. Traders realize that if housing stabilizes the toxic assets on the banks books become less toxic and loan loss reserves the banks are taking could be enough to cover losses related to unemployment. Today, JP Morgan (NYSE: JPM) CEO Jamie Dimon said he doesn't think banks need to raise more capital, although he sees bank consolidation accelerating.

Commodity related stocks zoomed higher today after manufacturing in China expanded for the first time in nine months. Century Aluminum (Nasdaq: CENX) rose 31%, Freeport-McMoRan Copper (NYSE: FCX) added 7% and Alcoa, Inc. (NYSE: AA) added 7%.

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