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[BRIEFING.COM] With the ebb and flow of closely-watched "incoming" data taking prevalence over corporate quarterly profits since the Fed raised rates on May 10, an economic calendar absent of any notable releases and another day without potentially hawkish Fed speak helped pave the way for a pair of strong earnings reports.

FedEx Corp (FDX 113.45 +5.13) was the first to deliver a stronger than expected quarter, reporting a 27% year/year rise in Q4 net income, which played into our Overweight rating on Industrials and helped the SnP 500 stay on pace for a 12th straight quarter of double-digit profit growth. FedEx CEO Frederick Smith saying they "remain optimistic about the global economic environment for fiscal 2007" also helped ease concerns about the impact of higher energy prices and rising interest rates on earnings, which plays into why we've maintained a Neutral market view since February. Also helping reassure investors that profits are holding up (so far), even in the face of rising interest rates and another widely anticipated Fed rate hike next week, was Morgan Stanley (MS 59.73 +2.71), which validated our favorable opinion on the brokerage group after it said Q2 net income more than doubled.

Aside from Financials and Industrials providing some much needed leadership, especially since the cautious tone lately has placed a lot of the focus on defensive-minded areas like Consumer Staples and Telecom Services, bargain hunters came out in droves today, picking up bargains in underperforming sectors like Technology, Health Care and Materials. Even with crude oil prices climbing 1.4% and back above $70 per barrel, which does not bode well for the consumer, data showing that weekly crude inventories reached an eight-year high alleviated potential supply concerns amid all of the nervousness about Iran's nuclear ambitions. The Energy sector's subsequent 1.9% surge, which nearly matched a 2.2% year-to-date gain, reminded investors that oil stocks are again expected to contribute substantially to the SnP 500's aggregate earnings growth.

Eight of ten economic sectors posted gains with strength seen in virtually all 147 SnP 500 industry groups. The SnP 500 climbed back into the green for the year, 26 of the Dow's 30 components posted gains, helping the blue chip index extend its year-to-date leading gain among the majors to 3.4%, while 97 companies in the Nasdaq-100 closed higher. The only notable laggard was Teva Pharmaceutical (TEVA 32.00 -3.67), which plunged 10% after Merck (MRK 35.26 +0.34) said it will cut prices of Zocor, whose patent expires Friday, to compete with generic versions.

Nevertheless, below average volume (the number of shares traded on the NYSE did not surpass 1.0 bln until 2:00 ET) lent little conviction behind the earnings-induced momentum spurred by the two blue chips and leaves in question as to whether or not a market bottom has finally been reached.
NYSE Adv/Dec 2378/865..