Mid-Day Recap: Financial Stocks Lead Equity Market Higher

After reaching an intraday low of 875, the financial stock heavy S&P is currently up 1.70% at 895. All three major indexes have rebounded into positive territory, although the rallies are in light trading volume, equity investors are hopeful that four weeks of market declines could come to an end after this week's expected earnings announcements. Investors however remain cautiously optimistic as there is a busy economic calendar ahead. Major Q2 earnings reports will come from Goldman Sachs, Bank of America, JPMorgan Chase, and Citigroup. Many analysts expect to see high trading revenues but remain skeptical of these bank's core business models.

As of 12:00 am, the S&P  was leading the climb with a 1.59% increase to 958, while the Dow had gained 1.48% to 8268, and the Nasdaq moving up 1.335 to 1438. In risk averse markets , a continued appetite for the safety of bonds has driven the 10-year yield down to 3.30%.

The only data to be released today is the 2pm Budget Statement from the Treasury, which is expected at -$97 billion. That will push the annual deficit well past the $1 trillion mark, even with three months left in the fiscal year.

In the headlines:

Treasury Secretary not concerned for W-shaped recession: Speaking after a meeting with his UK counterpart, Timothy Geithner said there are “still significant risks and challenges ahead” for the global economy, but officials from the advanced economies were in agreement that growth should resume in the coming quarters.

"I think we have remarkably strong consensus in place on core elements," Geithner said

He added: "We have a very powerful set of policies in place, coming on stream. I think there is a very good chance we will see the U.S. economy and the world economy get back to recovery, get growing again, over the next few quarters."

The outlook on Crude remains bearish: Oil continues to trade below $60 per barrel, after falling in seven of the past eight days. The International Energy Agency said stockpiles in advanced economies were large enough to supply more than two months of demand, precluding any quick rebound in prices.

Goldman to Post $2 Billion in Q2 Profits: The influential financial analyst Meredith Whitney upgraded her earnings forecast for Goldman Sachs. She expects the earnings report, to be released tomorrow, to come in at $4.65 a share, much higher than the median forecast of $3.48. Whitney said the former investment bank will benefit from a "tsunami of debt issuance" by governments.