All major U.S. stock indexes popped up at the opening bell today and have been displaying strength ever since.  The rally is broad based, with advancers trouncing decliners by about 7-to- 1 on the Big Board. The move is once again driven by the basic material sector. U.S Steel (X) is up sharply, following through on some recent strength over the past couple of weeks. Capital goods companies are also performing well, helped by earthmovers Caterpillar (CAT - Free Analyst Report) and Deere (DE). Caterpillar is looking to break through resistance, after beating earnings estimates today.  The technology sector is also having a good day, led by Qualcomm (QCOM), which is up over 8% for the session, on raised guidance. Other sectors to watch are the transports, led by United Parcel (UPS) and Union Pacific (UNP). The Railroad Company posted better-than-expected profits today. There were no major declining sectors in the roughly ten sector groups.

Today’s action may be a reversal of yesterday’s meltdown, which snowballed on the Bernanke testimony. However, it may also reflect some positive earnings releases. In addition to the names above, bellwether telecom company, AT&T (T - Free Analyst Report) also beat expectations, and raised its forecast. Due out after the bell are earnings from Microsoft (MSFT - Free Analyst Report) Amex (AXP - Free Analyst Report) and Amazon (AMZN).  No doubt traders will be looking at the results of these market movers.

Some economic news out today is largely being shrugged off.  An initial jobless claims report for the week ended July 17th showed claims rose from the prior week, and were higher than expected.  More recently, data was released showing existing home sales slipped 5.1% in June from the prior month. Although median selling prices rose, inventories jumped.  Despite the move up today, the data probably won’t help the shares of homebuilders, which have been one of the weaker performing sectors in the market for the past several weeks. This will also likely keep the battered furnishings sector under pressure.

Rising markets don’t exist in a vacuum, and it is very likely that some of the positive action in the U.S today may be a carry through from Europe.  All the major country exchanges were up sharply over there. The FTSE was up dramatically, helped by banks and commodities. Bank stocks rallied on investors’ optimism about stress test results due to be released shortly.  The euro is also up, partly on optimism about Europe’s economy, and a weaker dollar index.  In Asia, markets were mixed, following the Bernanke talk.

Some of what may be driving the stock market today could also be strength in commodities.  The past market run was driven by commodity demand.  Commodity consumption seems to suggest that the global economy is still strong.  All major energy futures are having a good day. The move may also reflect reports of a tropical storm brewing in the Caribbean, as well as the weaker dollar index today. The jump in oil prices may help lift select oil stocks.

Technically, the market is seeking to rebound. The S&P is taking another stab at clearing the 1,100 mark. Hopefully, for the bulls, most of the bad economic news has been “priced in” and healthy earnings reports can push the index higher.