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[BRIEFING.COM] The market reclaimed the ground it lost yesterday. The S&P and Nasdaq fully erased their FOMC-induced losses, and the Dow came close to doing the same. The Technology sector's leadership was the muscle behind the advance, but buying was broad-based and took virtually every area of the market higher.

Buyers dominated the trading action from start to finish. There was not much meaningful news to account for investors' bullish bias. As such, it appeared to be a result of the stock market's hopeful view that the Fed is near the end of its tightening cycle. We don't necessarily concur, however. It isn't a guarantee that several more rate hikes are on the horizon, but we see the basically unchanged diction of the FOMC's policy directive as indicative of at least one more hike. Beyond that, monetary policy is uncertain and will, as the Fed has said, depend on the data. In our view, recent numbers have not given the Fed a reason to halt its tightening. Accordingly, the possibility of more rate hikes after May should not be dismissed. Lately, the stock market has demonstrated resilience to interest rate concerns. The implications of rising rates will inevitably lead to slower growth than Wall Street expects in the second half of the year, though.

While equities rallied, Treasuries took a different course. Bond traders appeared to have maintained a more cautious stance in the wake of yesterday's FOMC event and amid continued rate uncertainty. Because today's economic calendar lacked data (outside of the energy inventory report), there wasn't much to diverge that market's attention. Selling today was less profound, but yields across the curve rose nonetheless. At the close of equity trade, the 10-year was yielding 4.80% - a level not seen since June of 2004. Still, rate-sensitive areas of the stock market rose. The Financial sector trailed the broader market, yet it still booked a 0.4% gain. Banks traded in mixed fashion. Stocks at the regional and diversified end of the spectrum were relatively flat. Investment banks and brokers, meanwhile, continued their trend of outperformance. A raised profit forecast from TD Ameritrade (AMTD 20.96 +1.80) served as a catalyst there. Other particularly rate-sensitive areas of the market, like the Utilities sector (+0.8%) and the homebuilding industry, also attracted buyers.

Rising yields did not, today, deter buyers. However, that factor did not help stocks, and nor did rising energy prices. After surging yesterday, prices across the energy complex continued their streaks today. The Department of Energy's weekly inventory report was the driver. It was a mixed bag - crude supply rose much more than had been expected, while gasoline and distillate inventories both fell more than had been anticipated - that initially led to choppy energy trading. But the gasoline portion was ultimately the focal point. Its drawdown, which was more than three times the drop analysts had forecasted, garnered added attention as emphasis shifts to the summer driving season from the winter heating (i.e., distillates) season. Gasoline futures gained close to 2%, and crude closed at about $66.50 per barrel (+0.7%).

The Energy sector benefited from the price action and registered a supportive 1.0% gain. At the same time, areas of the market that are especially energy price-sensitive, like transportation stocks and retailers, also rose. On the other side of the commodity board, many metals also advanced. Several, including copper and silver, were at or near historic highs. As a result, related-stocks rose and Materials advanced 1.2%.

As mentioned above, the Tech sector fueled today's market. The tech-heavy Nasdaq, to that point, gained 1.5% and hit a five-year high. Tech areas that were yesterday's laggards were today's legs. Bargain hunters sent semiconductors surging. Hardware also soared. Upgraded Sun Microsystems (SUNW 5.25 +0.22) drove that industry, and a recovery in Hewlett-Packard (HPQ 32.72 +0.65) added momentum.

Not all of HP's fellow Dow components fared as well. General Motors (GM 22.15 -0.60) weighed on the average following its assertion that certain GMAC financial information should not be relied upon and will have to be restated. Questions over whether a sale of a controlling stake in GMAC will occur was not good for that stock. Downgraded Caterpillar (CAT 73.67 -1.20) was another weak blue chip, but upgraded 3M (MMM 77.56 +1.26) shares helped offset its decline within the Industrials sector. Reports that Northrop Grumman (NOC 68.67 +0.73) was awarded a $2.5 billion contract from the Department of Energy lent further upside to that area of the market. Pfizer (PFE 25.24 -0.11) also declined. That stock received some added attention today, due to reports that the company expects to fetch about $14 billion for it consumer products business, for which initial bids were reportedly expected today. It and other drug stocks pressured the Healthcare (+0.2%) sector, but HMOs were an offsetting factor. UnitedHealth's (UNG 55.98 +1.66) reaffirmation of its strong full-year guidance lent a measure of support, and underpinned our favorable view on the industry.
NYSE Adv/Dec 2381/922...Nasdaq Adv/Dec 2227/849