Devoted to understanding the basics and fundamentals of investing

Who knows if it is just a temporary blip or not, but for today at least, investors seemed less worried about the recent credit market problems. There was some encouraging news on banks borrowing from the Federal Reserve's discount window, and investors used that as a reason to bid stocks higher. Also helping the market was the higher yields in the treasury bonds. Earlier this week yields fell faster than they have in 20 years in a flight to quality. Today the 3 month treasury bond yielded 3.66%, up from its low of 2.51% on Monday.      

Basic material stocks led the market higher today. Nucor Corporation (NYSE: NUE), the second-biggest steelmaker in the United States, surged higher by 7.12% as the company said demand for its products is increasing. The construction sector also surged higher as Foster Wheeler Limited (NYSE: FWLT) rose nearly 8%, and McDermott International (NYSE: MDR) jumped by almost 7%.

US Airways Group Inc (NYSE: LCC) shares rose 7.23% and Delta Air Lines Inc (NYSE: DAL) rose 2.2% after analysts upgraded the stocks saying they have been knocked down too far of late and appear to be good values.

Energy stocks were also strong as Valero Energy Corporation (NYSE: VLO) led the sector higher after they said there were no supply disruptions from Hurricane Dean. Drillers also did well with Diamond Offshore Drilling Inc (NYSE:DO) rising 4.44% after saying that its Mexican rigs were still on location.

The market was strong across the board today, and internals were quite strong. The advancers led decliners 78% to 20% on the NYSE, and 67% to 29% on the NASDAQ. Volume was not particularly strong today, but August is generally one of the lightest months of the year as far as volume on the exchanges.

The word that four major banks have borrowed from the Federal Reserve's discount window in the past few days since the Fed moved to lower the discount rate also helped the market greatly. Strategists say that this type of move by major banks lends credence to the thought that the Federal Reserve might have helped the liquidity in the credit markets greatly by lowering the discount rate.

Takeover speculation and higher yields on treasuries helped the market ease its credit worries today. There is no telling what could be in store tommorrow, but the bulls will certainly leave happy with today's action.