An old saw when it comes to investing is "buy the rumor, sell the news." Over the last month and a half we have seen just the opposite as market participants sold on the rumor of a tough second quarter earnings season and then, last week, bought on the news that it turned out to be less bad than expected.

After fears of bad news on earnings helped to push stocks down 7% from June 12 to July 8, stocks rebounded 7% last week as the S&P 500 posted the biggest weekly advance since the beginning of the rally back in March. The fuel came mainly in the form of better than expected news on earnings as companies such as Goldman Sachs Group Inc., Intel Corp., and Johnson & Johnson beat analysts’ estimates. Financial stocks soared, even as lender CIT Group appeared to be headed toward bankruptcy after failing to secure a federal guarantee for its bonds.

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