The morning's economic data now out of the way, the broad market seems set on extending yesterday's big rally.

The

Labor Department

said that the headline

Producer Price Index gained 1% overall, double the consensus estimate of economists polled by

Reuters

. The core rate, which excludes food and soaring energy prices, increased 0.3%, fairly close to the expected 0.2% increase.

The bond market did little on the news, with the 10-year note rising 7 ticks to 101 25/32 and yielding 6.255%. But traders are finding the relatively benign core number reason enough to bid the futures sharply higher. At 8:35 a.m. EST, the

S&P 500 futures

were up 10.4, about 15 points above fair value and a strong indication for large-cap stocks in general. It should be noted that the market has reversed direction shortly after the open every day this week, though.

"We're seeing some following through from yesterday," said Bill Meehan, chief market analyst at

Cantor Fitzgerald

. "I wouldn't be surprised to see some more laggards that provide reasonable value continue to move higher, and maybe see investors sell off some of the riskier names."

It's an understatement to say that yesterday's session was encouraging to those concerned about the narrowness of the market's recent strength. As the

Nasdaq

plummeted, nearly every beaten-down

NYSE

sector rallied hard, including paper stocks, airlines, chemicals, financials and pharmaceuticals. Here's how pure the rotation was: The

American Stock Exchange Oil & Gas Index

rose 1.1% even as the price of crude oil fell by nearly a buck.

Such a dramatic reversal might tempt one to suspect there's a new trend afoot, that the usual script of market divergence may be about to get turned on its head. But remember the usual caveats that have been attached to every recent bounce in Old Economy stocks. First, the immediate interest-rate environment remains unfriendly. Today's data does little to change the market's apprehension of that basic fact, especially with the

Consumer Price Index, a much more authoritative measure of inflation, due out tomorrow.

More importantly, investors love to buy tech on the dips. The Nasdaq has approached correction levels twice already this year, and each time it's come roaring back to new highs. And we'll see some program buying in tech in the early going. The

Nasdaq 100

futures were lately up 71.45 points.

The large European indices were solidly higher in afternoon trading after the

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European Central Bank

decided to

raise eurozone interest rates by 25 basis points. Frankfurt's

Xetra Dax

was up 192.19, or 2.6%, to 7606.65, while the Paris

CAC

was up 115.90, or 1.9%, to 6304.84. The euro was little changed, trading at $0.9666.

London's

FTSE

was up 123.5, or 1.9%, to 6570.5.

Asian markets moved in different directions overnight.

The blue-chip strength on Wall Street helped stocks in Tokyo. The

Nikkei

rose 174.63 points to 19,253.23. Caution in the wake of yesterday's

Bank of Japan

intervention kept currency dealings quiet, with the dollar holding around 105.65 yen in Tokyo trading. The greenback was lately sitting at 105.36 yen.

Sentiment was much shakier in Hong Kong, where the

Hang Seng

fell 388.20, or 2.3%, to 16,359.00. While yesterday's selling in Nasdaq stocks spread to local tech and telecom issues, investors were also dealing with blunt comments from Chinese Premier

Zhu Rongji

concerning Saturday's

presidential

election in Taiwan. Zhu warned voters not to act "on impulse" and make any regrettable decisions.

In Taiwan, heavy buying from the government "market stabilization fund" helped the

TWSE

index rise 42.73 to 8682.76.

For a look at stocks in the preopen news, see Stocks to Watch, published separately.