Retail Sales Reports Come In Stronger Than Feared; Market Spikes Higher

The market got a surprisingly strong boost at the open after the June retail sales reports came in stronger than initially feared. With all of the bearish talk in the media about the high prices of gasoline, and the debacle in the subprime market, I think many had concluded that retails sales would be punk.

But the world's biggest retailer Wal-Mart (WMT) posted sales that grew +2.8% vs. estimates of +0.5%. Several other retailers also reported strong same-store sales. I will try to have a roundup later this morning.

In M&A news, Rio Tinto (RTP) bid $38.1 billion, or $101 per share, for Alcan (AL), which easily tops Alcoa's (AA) bid of $76/share.

What is surprising is that oil is also surging, up to $73.50. And bond yields have moved higher as well, with the 10-year yield up to 5.10%. Normally, these would weigh on the market. Given how we have seen early rallies fade recently, I want to wait to see if the market can hang on to these gains into the close before getting more bullish.

I was beginning to think the SPX was setting up for a bit of a correction, but every time it dips below its 50-day, it seems to immediately rally and recapture this important level.