The market had its best day in more than a month as all three major indices gained more than 1.5%. More important, it happened in a day with crude oil having the biggest one-day jump in terms of dollar value and two biggest bond insurers seeing their ratings cut by the S&P. The news on the economic front was mostly positive. Initial jobless claims came at 357K compared to 372K expected and continuing claims decreased to 3.093 million from 3.109 million in the previous week. We also had some good news from retailers. The Thomson Reuters Same Store Sales Index recorded a 2.5% gain in May while analysts called for a rise of 1.2%. Almost 60% of the retailers beat estimates.

All major sectors were higher in today’s trading. Commodities and transportations were among the biggest winners. Interestingly, the Dow Transportation Average closed at a record high despite a record rise in oil price. The CRB commodity index jumped more than 2% led by agricultures and energies. The US dollar was mixed against major currencies. But it was lower almost 1% against the euro following comments by ECB President Trichet that it might increase the region’s interest rate as soon as next month. Treasuries continued to slide while yields moved higher across the board. The VIX index tumbled by more than 10% and now is below 19. The market breath was positive compared to previous few sessions. However, we suspect that much of today’s gain was due to anticipation of positive nonfarm payroll report coming out tomorrow morning. We had two similar situations back in May and February when the market had huge gains right before the job report but only saw the gains fade in the days following. Hopefully things are a little different this time.