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The U.S. equity market pressed forward this morning, emboldened by some encouraging news from Europe regarding the sovereign debt problems in Portugal (discussed below). As we approach the midday hour on the East Coast, all of the major U.S. indexes are comfortably in positive territory, with the Dow Jones Industrial Average and S&P 500 Index exhibiting the most strength. Advancing issues are far outpacing decliners on both the New York Stock Exchange and the NASDAQ.

Nearly every stock in the Dow 30 is up so far today, with notable advances by Bank of America (BAC - Free Bank of America Stock Report), Intel (INTC - Free Intel Stock Report), and JPMorgan Chase (JPM - Free JPMorgan Chase Stock Report) leading the charge; the latter two companies are scheduled to report quarterly results on Thursday (after the market’s close) and Friday, respectively. Shares of Telecommunications giants AT&T (T - Free AT&T Stock Report) and Verizon Communications (VZ - Free Verizon Stock Report) are also up after weak showings yesterday—both companies have been in the news recently with regards to servicing Apple’s (APPL) iPhone. From a sector perspective, all the major groups, save for the transportation area, are in the black, with the biggest gainers being energy, conglomerates, basic materials, capital goods, and financial stocks.

The strong showing on Wall Street this morning follows impressive, broad-based advances in the Asian Indexes and the European bourses. The world indices reacted positively to signs that tensions over Europe’s sovereign debt problems have eased a bit. Portugal, which is in the midst of a credit crisis and maybe the next candidate for a bailout after Greece and Ireland received such support last year, was able to raise capital in international markets. Plus, remarks by the European Union that it would boost the size of a rescue fund for Portugal if need be, provided some comfort to investors. The easing of concerns about Portugal’s debt problems, even if only temporary, has been good for equities, but bad for bonds. The yield on the benchmark 10-year U.S. Treasury note, which moves in the opposite direction to the price, climbed sharply this morning. The price of gold, which is regarded as another safe-haven investment, was also down this morning.

The weakness in the precious metals category is one of the few disappointments in the commodity markets.  Indeed, the dollar’s weakness has boosted the fortunes of several other commodities so far today.  The price of crude oil is up nearly 1.3% following a report that showed a drawdown of 2.154 million barrels versus consensus of a drawdown of 1.4 million barrels. The greater demand for the energy commodity is driving the price upward.  We have also witnessed broadbased advances for agricultural, livestock, and consumer futures.

Looking ahead to the afternoon hours, our sense is that the bulls will remain in the driver’s seat, as the international markets all closed higher and there is little news on the economy or Corporate America to serve as a fly in the ointment. That said, with the market looking overextended at this moment, a bit of late profit taking can’t be ruled out. Stay tuned.