Stock Rally Stays On the Gas

As stocks in the U.S. and overseas continue to echo each others’ recent rally, even the most dour market skeptic would have to admit that the weeklong runup in equities at least had an underpinning of tangible credibility.

Better-than-expected earnings reports late Wednesday from the likes of tech powerhouses Apple (NASDAQ:AAPL) and Qualcomm (NASDAQ:QCOM) kept the love flowing on Thursday, pushing stocks (as judged by the S&P 500) about one more rally away from their highs of the year.

The Dow Jones Industrial Average added 52 points to 12,506, the Nasdaq rose 18 points to 2820 and the S&P 500 gained 7 points to 1337.

Tech stocks were certainly the muscle behind this week’s rally — the Nasdaq posted a 2% gain for the holiday-shortened week vs. the S&P 500′s 1.3% rise.

But we’d be remiss if we didn’t mention the other positives to Thursday’s runup — financial stocks did finally join the rally, with the SPDR Financial Select Sector (NYSE:XLF) exchange-traded fund gaining 0.6%, and market breadth continued to look strong with New York Stock Exchange advancers outgaining decliners by nearly 2-to-1.

Indeed, this was no small-cap-driven gain, although the Russell 2000 did put up a slight outperformance, gaining 0.7%.

Much of that, we’d expect, would involve a return to lower-cap energy plays as here we are again with crude oil jumping over $112 a barrel.

As alluded to on Wednesday, the last time oil reached that level is the last time stocks were once again near their highs for 2011. With many of the big-cap tech names having already provided a lift to stocks in recent days, it seems plausible that the market will need similar good news from other sectors.

However, those other sectors are likely to be more consumer- and manufacturing-oriented, and thus more affected by higher oil prices.

It’s worth noting the Dow Jones Airline Index fell to an eight-month low on today’s oil price rise. Southwest (NYSE:LUV) fell 2.8%, while American Airlines parent AMR Corp. (NYSE:AMR) dipped 2.7%.

As on Wednesday, part of that rise in oil can be laid at the feet of the dollar, which continued to fall, helping also to boost gold and silver, which once again nailed all-time and 31-year highs, respectively.

Perhaps the biggest skeptics on Thursday were investors in Treasuries, with the 10-year note’s yield little changed and not significantly challenging a two-month downtrend.