Stocks are enjoying an exuberant rally today, as positive economic data in the U.S. fuels investor optimism. The S&P/TSX index has powered 86 points higher to 6,946.

Volume is decent at 103.3 million shares, with buying swamping the selling by a nine to two margin. Market breadth is also very bullish, with winners outpacing losers 12:7.

The rally is coming across most sectors, with only golds being left in the cold. Diversifieds are up about 2.75%, the techs have added 2%, and there are strong gains in energy stocks, materials, financials and industrials.

The banks aren’t the biggest movers, but they are dominating the volume. CIBC is leading the way higher, up 2%, and there are strong gains in Scotiabank and TD Bank. Bank of Montreal is also up, but more modestly than the others.

Royal Bank is taking a hit, down 1.2% in heavy trading. Fairfax is up 5.6%, but Kingsway is down 1.3%..

Air Canada is a big gainer, up more than 13% on news that it has reached a deal with its pilots that will keep the airline flying for now.

Nortel is joining the tech rally with a 1.4% gain in strong trading. BCE is up 1.8% in the telecom space. And, there are big gains in names such as EnCana, Zarlink Semi, Neurochem, Aeterna Labs, Alliance Atlantis, CAE, Biomira, Wi Lan, and Lion Ore Mining.

DuPont Canada is up about 1% in heavy trading on news that the parent company has increased its offer to minority shareholders from $21.00 to $21.75 per common share in cash.

On the downside, golds are weaker, as traders leave their safety plays. Glamis Gold and Kinross are both down about 1.6%, leading the way.

There is also selling in Transcontinental Group (owner of Investment Executive), SNC Lavalin, and Enbridge.

In M&A news, Richelieu Hardware has acquired the assets of Laval’s Laknord Inc., a company specializing in the distribution of wood finishing products. No price was disclosed on the deal.

Canadian National Railway reports that it has terminated negotiations to acquire ONRail because of the Ontario government’s demands for public sector-like job guarantees for employees of the provincially owned railway.

In earnings news, Vincor International reported record net income of $39.9 million, for its latest year.

Dynex Power has released its revised results for the first quarter after its new CFO and the firm’s auditors determined that revenues for the first quarter of 2003 were not recorded in accordance with Canadian GAAP. The profit on the sale of the assets, amounting to $2,976,142 has now been reclassified on the balance sheet as deferred revenue under current and long-term liabilities.

Dynamic Oil & Gas Inc increased its net earnings by 296% to $3.3 million, a quarterly record.

In other news, Bennett Environmental reports that it has been awarded a soil clean up contract valued at $200 million.

Slater Steel Inc. reports that it lost $8.8 million in the first quarter, and it plans to restructure. It has filed for bankruptcy protection in Canada and the U.S.

In New York, stocks opened higher, but rallied mid-morning after stronger than expected results were reported from a manufacturers’ survey.

The Dow Jones industrial average is up 143 points to 8,994. The S&P 500 is 14 points higher at 978. The Nasdaq composite index is 25 ticks stronger at 1,621.

For some reason, the good feeling hasn’t spread to the small caps. The S&P/TSX Venture index is down a point to 1,089. Volume is average at 16 million shares. LMX Resources is leading the day, with a 1.5¢ gain to 7.5¢ on 801,000 shares.