U.S. Stocks Jump Higher, Financials Lead the Way

Stocks pushed higher for the second straight session today as investors view fears of a "double dip" recession as overblown and sentiment turns positive into disclosure about the methodology of the European bank stress tests. U.S. financial stocks are leading the advance, which is viewed as a positive because of their weight in the broader index.

The Dow is up 148 to 9892, the Nasdaq is up 29 to 2,123 and the S&P 500 is up 16 to 1,044.

With stocks down 14 percent from the April highs, investors are beginning to feel more comfortable with valuations and are bargain-hunting some of their favorite stocks.

While the "new normal" of slow growth is here to stay, a "double dip" may not come to fruition according to some market analysts.

European stocks rallied today as The Committee of European Bank Supervisors are set to outline its methodology for the bank stress tests, which will simulate how the top 100 Euro-zone banks will fair under adverse economic scenarios. Debate about the scope of the tests and how much detail will be revealed could cause a delay in the release of the outline. Results of the stress tests are due on July 23.

U.S. financial stocks are among the strongest sectors today after State Street (NYSE: STT) raised its Q2 outlook. State Street expects to report to report revenue of $2.3 billion and EPS of $0.87 for the second quarter of 2010, which is above the consensus of $2.21 billion and $0.72 and respectively. On an operating basis, State Street expects EPS of $0.93 on revenue of $2.2 billion. State Street is up 9 percent and the sector is up 2.4 percent, as represented by the ETF Financial Select Sector SPDR (NYSE: XLF).

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