Morning Update: Financials Lead Market Higher

The market was under pretty heavy selling pressure in early trading, but it has since bottomed and moved back into positive territory.

The news before the bell was all bad: UBS was cutting 5500 jobs and Merck (MRK) was cutting 1200 jobs; oil is hitting new highs above $122; and Fannie Mae (FNM) reported a bigger than expected loss, cutting its dividend -30%, and raising $6 billion in capital.

But as FNM's conf call wore on, the stock began to turn higher and erase all of its losses. That helped the financial sector bottom, and pretty soon the rest of the market followed. Energy stocks are leading the way on the oil spike, but the bank index is the 2nd best performer in the early going.

Asian markets were mixed overnight, and the dollar is lower vs. the Yen and Euro today. Bond yields have also moved higher, with the 10-year yield up to 3.86%.

The ARMS Index is low at 0.74, and the put/call ratio is also low at 0.78. These remain a bit of a concern, and could limit the extent of this little rally attempt. I have not put any cash to work yet this week.