Was the Japan Rally a Positive Omen for Earnings?

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Stocks pulled out of their slump on Monday afternoon on hopes that the Japanese rally could be a positive omen for earnings season.

There was no economic data from the United States on Monday which would have given stocks momentum in either direction. Although the stock index futures were in positive territory ahead of the opening bell as a result of the Japanese rally, the Dow spent the morning in the red, while the S&P 500 and the Nasdaq struggled at the break even level. By 2:00 p.m., all of the major indices had established some momentum.

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Although some commentators attributed the bullishness to the onset of earnings season, most analysts are expecting a weak quarter. The most likely explanation is bullishness about the outrageous rally that has been going on in Japan for the last four trading days.

The Dow Jones Industrial Average (NYSEARCA:DIA) rose 48 points, closing at 14,613 for a gain of 0.33 percent. The S&P 500 (NYSEARCA:SPY) advanced 0.63 percent to close at 1,563.07. The Nasdaq 100 (NASDAQ:QQQ) climbed 0.52 percent to 2786, while the Russell 2000 (NYSEARCA:IWM) surged 0.85 percent to 931.

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