The U.S. stock market is having a stellar day today.  All the major indexes are currently up better than 1%, with advancing issues beating decliners by over 4-to-1 on the NYSE. All major market sectors are advancing. There is considerable strength in the basic materials group. The move likely got some assistance from Potash (POT), which is up about 25% today, after it rejected a takeover proposal from diversified commodity giant BHP Billiton (BHP). Other fertilizer stocks are also rallying, in what seems to be a sympathy move. The transportation sector is also leading, helped by FedEx (FDX) and United Parcel Service (UPS). Meanwhile, other areas of strength include the capital goods sector, helped by earthmovers, such as Caterpillar (CAT - Free Analyst Report). Many of the retail names are also up sharply.

Some of today’s market move may be a result of a couple of big earnings reports. Retail giant Wal-Mart (WMTFree Analyst Report) posted strong second-quarter profits, largely on cost cutting efforts. Although the company also increased its profit forecast, some analysts were disappointed with revenues. Elsewhere, Home Depot (HD - Free Analyst Report) also reported decent second-quarter profits and guidance, but tempered its revenue outlook. These results are indicative of a pattern lately, of companies meeting the bottom lines, but experiencing some top-line pressure. This is being taken by some analysts as a warning that the economic recovery is losing steam.  In addition to the above reports, TJX Companies (TJX) reported a decent quarter.

Elsewhere, the economic reports out today were mixed. Housing starts  for July rose about 1.7%, compared to the prior month, which were lower than expected. Also, building permits for July slipped 3.1%. Elsewhere, in a separate report, the Producer Price Index for July rose 0.2%, which was about what analysts had targeted. The fact that this figure rose a bit is not entirely negative, because it suggests that deflation, feared by some, may not be a paramount issue. In another batch of reports, industrial production and factory utilization data released this morning indicated some underlying strength.

Today’s market move may have been carryover from a good showing in the international markets. The European markets had a good day. The CAC the DAX, and The FTSE were all up better than 1% for the session.  The Asian markets were mixed. The Chinese markets held up well finishing in positive territory. However, the Nikkei closed at multi-month lows, on fears about a global slowdown as well as continued concerns about the rising Japanese Yen.

Technically, today’s rally is certainly welcome after a decent day yesterday. The market seems to have priced in a lot of negative economic news, and hopefully it can stabilize at the current level. Also, as has been noted, increased merger and acquisition activity could provide some support for battered shares.