Late Rally Sparked by Economist's Comments

Flat trading throughout the day didn't deter major indexes from picking steam Thursday afternoon after ultra-bear economist Nouriel Roubini, said he thinks the worst is over. "The free fall of the U.S. economy has stopped," he said at a conference in New York. "The economy is still contracting, but slowly." He added that the government may need to supply a second round of stimulus funding late this year or in early 2010.

All eyes were on earnings reports, with JPMorgan Chase (JPM) reporting surprise results to the upside Thursday morning. The bank said it earned $2.72 billion, or 28 cents a share, during the second quarter, compared with $2 billion, or 53 cents a share, in the year-ago period. The bank also recorded record revenue of $28.62 billion in the second quarter. Analysts had expected JPMorgan to earn 6 cents a share on revenue of $25.9 billion. Bank of America (BAC) and Citigroup (C) report Friday.

The Dow Jones Industrial Average closed up 95 points at 8711. The Nasdaq gained 22 at 1885 and the S&P 500 picked up 8 to finish at 941.

For a detailed rundown on Thursday’s trading session see our market story.

A pickup in commodities in Asian markets helped boost SPDR S&P Metals & Mining fund (XME) 4%. The SPDR S&P Oil & Gas Exploration & Production fund (XOP) climbed 2.0% after crude prices rose.

Betting against the late rally gave the Short S&P 500 ProShares (SH) a mild hit, pushing shares down 0.9%. The iShares FTSE/Xinhua China 25 Index fund (FXI) receded 0.6% on concerns that Chinese markets were overheating.

Launching Pad
On Thursday, Direxion launched a pair of exchange-traded funds targeting domestic real estate investment trusts. The Direxion Daily Real Estate Bull 3X Shares (DRN) seeks to provide 300% exposure to the daily returns of the MSCI U.S. REIT Index. The Direxion Daily Real Estate Bear 3X Shares (DRV) DRV will provide three times the inverse exposure to that same index. Both funds will charge expense ratios of 0.95%.

Earnings and Conference Calls
A. O. Smith, Bank of America, BB&T, Citigroup, Elisa, First Horizon National, General Electric, Marshall & Ilsley, Mattel, Meade Instruments, Prosperity Bancshares, PYI, Storebrand ASA, Student Loan, Webster Financial

Economic Data
8:30 a.m. June Housing Starts

A look at how the industry's most popular ETFs did on Thursday: