Traders on the floor of the New York Stock Exchange on Thursday, July 17, 2008
Traders on the floor of the New York Stock Exchange on Thursday, July 17, 2008 - 
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Kai Ryssdal: If you think something's going to be really lousy and it only turns out to be a little bit lousy, then it's actually good, right? That particular bit of self-deception played big on Wall Street today. The topic was corporate profit reports. And the phrase of the day was better than expected. Marketplace's Amy Scott puts it all into context.

Amy Scott: Profits at JPMorgan Chase fell 53 percent in the second quarter. But investors cheered. The stock rose to its highest level in a month and brought other bank stocks along for the ride. A similar thing happened yesterday with Wells Fargo. That's because analysts had predicted worse news from the banks.

Jim Paulsen: On any given day, the stock market isn't reacting necessarily to the news of the day, it's reacting to the news relative to what was expected.

Jim Paulsen is chief investment strategist at Wells Capital Management.

Paulsen: The expectations have gotten so bad that even bad news, what would've been bad news you know three, four, five months ago, is now good news because it isn't as bad as they feared.

Investors also got a dose of real good news today. The price of oil fell below $130 dollars a barrel for the first time in a month. Bill O'Grady is head of investment strategy at Wachovia Securities. He says lower oil prices mean lower inflation. And that means the Federal Reserve can hold off on raising interest rates.

Bill O'Grady: If inflation concerns are going to abate a bit, this kind of allows the Federal Reserve to wait longer to make it's next move, which will probably be to raise rates.

O'Grady says this stock market rally could have legs if oil keeps sliding. But there could be plenty of bumps along the way, as more financial firms come clean on their second quarter credit losses. After the markets closed, Merrill Lynch reported a worse-than-expected loss for the quarter. Citigroup is up tomorrow.

In New York, I'm Amy Scott for Marketplace.

Follow Amy Scott at @amyreports