The falling price of crude oil might be bad news for energy stocks and, by extension, the energy-heavy Canadian benchmark index. But, wow, it seems to be doing great things for just about everything else.

Crude oil fell to $127.70 (U.S.) a barrel on Tuesday, down $3.34, apparently because tropical storm Dolly is no longer a threat to energy supplies in the Gulf of Mexico. But more evidence that high gas prices are convincing drivers to spend more time in their driveways is also a likely factor in the retreat.

Either way, the S&P/TSX composite index reacted badly to the move, closing at 13,643.19, down 46 points or 0.3 per cent. Energy stocks in particular were the big drags. EnCana Corp. fell 3.6 per cent, Canadian Natural Resources Ltd. fell 4.2 per cent and Petrobank Energy and Resources, one of the stars in the sector over the past year, tumbled 5.3 per cent.

So far, General Motors Corp. has been an ideal way to play the falling price of oil, as those parking lots of unsold SUVs and Hummers suddenly look more appealing. Since its peak on July 3, oil has fallen 12 per cent. The ProShares Ultra Short Oil and Gas ETF, a fund that gives positive returns when the share prices of oil and gas producers fall, has returned 19 per cent over this period. But look at GM, which was in the throes of irrelevance when oil seemed bound for $150 a barrel: GM shares are up 40 per cent.

They were at it again on Tuesday, rising 9.4 per cent and helping lift major indexes. The Dow Jones industrial average closed at 11,602.5, up 135.16 points or 1.2 per cent. The S&P 500 closed at 1277, up 17 points or 1.4 per cent.

Financials were very strong, after the new chief executive officer of Wachovia Corp. assuaged investors' concerns that the financial firm would have to tap the market for additional funds in the form of a stock issue after it reported steep losses in the second quarter. Wachovia shares rose 27.4 per cent – a return that looks even more impressive when you consider that they were down more than 10 per cent at the start of the day.

Other financial stocks enjoyed similar eye-popping gains that are becoming all too normal as investors join the rush into beaten-up names. First Horizon National rose 16.2 per cent, Citigroup Inc. rose 6.1 per cent and Wells Fargo & Co. rose 10.5 per cent.

In Canada, where the stocks of the Big Banks have been in copycat mode, there were also big gains among financials: Canadian Imperial Bank of Commerce rose 4.1 per cent and Toronto-Dominion Bank rose 3.6 per cent.