The market rallied for the second day in a row. News on the economic front was mixed this morning. Initial jobless claims came lower than expected. More important, continuing jobless claim number also dropped by 100K and now is back below 2.7 million. Based on the job numbers, it certainly doesn’t look like a recession is coming. The Existing home sales, on the other hand, dropped by a larger amount than predicted. In addition, single-house price dropped first time on record. However, one thing worth noting is the surge in refinancing activities recently due to drop in mortgage rates. With the Fed widely expected to lower interest rates further(currently the market has priced in a 75% chance of 50bps cut in next week’s meeting), the mortgage rates is expected to fall even more and eventually will become attractive to new home buyers. This may be the true end of the recent sub-prime mess.

At around 1:30pm this afternoon, House leaders Pelosi, Boehner and Treasury Secretary Paulson announced their bipartisan $150 billion fiscal stimulus plan. The check for each individual was $300 as against previously expected $800. But the market didn’t seem to take it negatively. Both financials and retailers, the leaders of the two-day reversal, took a breath today while commodity and tech stocks were taking the leadership. It looks like risk takers are back to the market. Many commodities are doing really well and the CRB index is up 2.2%. US dollar was weakened against major currencies while gold shot up by more than 3% and now is above $910 per ounce. After the bell, Microsoft reported surprisingly positive results and should give Nasdaq another boost tomorrow.