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Stocks jumped today as investors hopes for additional rate cuts fueled fairly widespread buying. Though the Fed cut rates by 75 basis points last week, many believe that an additional cut is coming this Wednesday. Those rate cut hopes propelled the Dow higher by 177 points today. The Nasdaq was not quite as strong, but it still gained 24. The broader S&P 500 gained 23, or 1.76% on the day.

Financials were once again a leader today. JP Morgan Chase (NYSE:JPM) gained 4.42% to continue its recent winning streak. Wells Fargo (NYSE:WFC) shares rose 3.72%, and the stock now sits right in the middle of its 52 week range. American Express Company (NYSE:AXP) gained 4.31% on the day, but has fallen in after hours trading after reporting its earnings and issuing a cautious outlook. Bank of New York Mellon (NYSE:BK) shares rose 3.69% on the day on slightly heavier than normal volume. Insurance company stocks were strong today as well. Travelers (NYSE:TRV) charged higher by 5.66% on strong volume. Allstate (NYSE:ALL) and MetLife (NYSE:MET) gained 4.4% and 4.01% respectively.

Retailers were very strong today as well. Saks (NYSE:SKS) gained 6.25% on strong volume today. Kohl's (NYSE:KSS) shares rose 3.9% on the day. Bed Bath and Beyond (Nasdaq:BBBY) continued its recent run, gaining another 4.39% today. Williams Sonoma (NYSE:WSM) gained 9.63% today, making its gain in the last two weeks a staggering 25%. American Eagle (NYSE:AEO) shares jumped 7.69% on news of a major buyback of shares. Nordstrom (NYSE:JWN) shares rose 5.6% and has now gained over 25% in just the past 7 trading sessions. Urban Outfitters (Nasdaq:URBN) also made nice gains today, rising 5.47%.

Technology shares were mixed today. Major internet names were quite weak. Baidu.com (Nasdaq:BIDU) lost 2.72% on the day. Google (Nasdaq:GOOG) shares fell another 1.84% today. Garmin (Nasdaq:GRMN) shares rose 5.05%, regaining some of the ground they have lost of late. Flextronics (Nasdaq:FLEX) gained 3.39% in today's session.

The action today was rather volatile, with stocks actually sitting just above the flat line at 3:20 pm, before charging higher into the close, led by a quick jump in financials.

Today's strength was certainly not because of a strong new home sales number this morning. In fact it was quite the opposite, with new home sales plunging even more than expected. New home sales from December came in at 604,000, which is 40.7% behind the same period last year. Most strikingly, at the current pace of sales, there is now almost 10 months worth supply of new homes on the market.

Volume was much lighter than it has been lately as investors clearly are taking a wait and see approach to the Fed and its monetary policy meeting this week.

Interestingly, Fed Futures are now pricing in an 88% chance of a 50 basis point rate cut on Wednesday. Before today this number was 70%. My worry is that the market could be setting itself up for a large fall if they get disappointed at all by the Federal Reserve.