Hope Floats, as Do Shares

No news was good news Wednesday, reflecting the market's newfound sense of optimism.

The major stock market indices advanced to fourth-month highs as investors embraced Tuesday's bullish tone. That said, this rally on the back of a Fed pause and lower oil prices is hard to trust given the tug of war in the markets.

Investors are stuck between reasons to support stocks and reasons to spurn them. On the supportive side, prospects for a so-called soft landing, low oil prices, double-digit profit growth, and many bearish investors throwing in the proverbial towel are helping send stocks higher. Notably, economically sensitive sectors like the transports and technology have led the market in recent days.

On Wednesday the Nasdaq Composite outperformed again, rising 0.5% to 2227 behind strength in tech favorites such as Tellabs (TLAB Quote), RF Micro Devices (RFMD Quote), Brocade (BRCD Quote) and Juniper (JNPR Quote).

The Dow Jones Industrial Average gained 0.4% to 11,543.32, while the S&P 500 added 0.4% to close at 1318.07. The S&P was buoyed by retailers such as Gap (GPS Quote) and energy stocks such as BP (BP Quote), which rebounded from recent weakness as oil broke its seven-session losing streak.

The Treasury bond market rallied Wednesday, as its more bearish investors continue to forecast a weak economy and rate cuts before any rate hikes. The 10-year Treasury note gained 2/32 to yield 4.76%.

Is Eight Enough?