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Wall Street soared to fresh 13-month highs on Monday as the latest signs that central banks’ easy money policies aren’t going away any time soon provoked another tumble for the U.S. dollar and another burst of buying in the commodities complex.
Today’s Markets
The Dow Jones Industrial Average rose 136.49 points, or 1.33%, to 10406.96, the S&P 500 gained 15.82 points, or 1.45%, to 1109.30 and the Nasdaq Composite added 29.97 points, or 1.38%, to 2197.85.The FOX 50 picked up 10.46 points, or 1.30%, to 815.17.
“As long as they want to stay this course of low interest rates and continued stimulus, I think we’re going to see the market rip to higher levels,” NYSE trader Jason Weisberg of Seaport Securities told FOX Business.
The Dow soared as much as 164 points as the U.S. dollar resumed its plunge -- tumbling to the lowest level since Aug. 2008. The greenback briefly turned positive earlier in the day after Fed Chief Ben Bernanke said he is "attentive" to changes in the currency's value. Commodities stayed hot as gold soared to fresh all-time highs and crude oil enjoyed its biggest rally in nearly two months.
Tacking onto last week's 250-point rally, the Dow soared to its highest level of the year. Like much of this fall’s gains, Monday’s rally was triggered by global central banks' easy money policies. The policies were reaffirmed by officials at the Asia Pacific Economic Cooperation, who said the global economy still needs "durable growth" before governments can withdraw stimulus.
“Like right out of the movie ‘Groundhog Day,’ Phil Connors wakes up on Monday morning (any morning in the movie) that greatly resembles last Monday where government officials say the stimulus spigot will remain wide open, the U.S. dollar weakens and markets rally,” Peter Boockvar, equity strategist at Miller Tabak, wrote in a note.
Almost all 30 Dow components ended in the green, led by Boeing (BA) and aluminum maker Alcoa (AA). No blue-chip stock fell by more than 1% but Bank of America (BAC) and Travelers (TRV) closed slightly lower.
The latest gains on Wall Street underscore how much market sentiment has improved in recent weeks and how fears of a pullback have mostly faded.
“If you said back at the end of august we are going to be at 10400 on the Dow and 11000 on the S&P, you would have thought we were crazy,” Jonathan Corpina, managing director at Meridian Equity Partner, told FOX Business.
Commodities and commodity-related stocks drove the markets higher on Monday. Fueled by the early losses for the dollar, gold rallied for the tenth time of the last 11 sessions, gaining $22.50 per troy ounce, or 2.02%, to $1138.60. Gold-related stocks such as Hecla Mining (HL) and Freeport McMoRan (FCX) jumped higher on the new records.
At the same time, the energy sector soared nearly 3% as crude oil jumped more than $3 on the dollar weakness. Individual energy stocks like Massey Energy (MEE) soared even higher. Bouncing back from last week's slide, crude rose $2.55 a barrel, or 3.34%, to $78.90.
Commodities had a muted reaction to Bernanke, who surprised analysts by making rare comments about the greenback, which has been mired in a big slump.
"We are attentive to the implications of changes in the value of the dollar and will continue to formulate policy to guard against risks to our dual mandate," Bernanke said in a speech, fueling a fleeting rebound in the greenback.
While a weaker dollar is a long-term threat to the U.S. economy, it has proven to be a tailwind for stocks as it increases companies' foreign profits and tends to boost demand for commodities.
"Bernanke finally is doing what any self-respecting central banker does: admit that the weakness of the reserve currency of the world matters," Boockvar wrote. "Until the world sees actual action, the U.S. dollar will remain in secular decline but today's comments may be enough to halt its current fall for now."
Some bears believe the dollar's decline will pick up steam, derailing the weak dollar/strong stock-market relationship.
The "dollar feels like it wants to really sell off now. Stocks liked a slow dollar decline but I don’t think they will like a dollar rout," said Joe Saluzzi, co-head of trading at Themis Trading.
Corporate Movers
General Motors reported a $1.2 billion loss in its first quarter out of Chapter 11 bankruptcy and said it would begin to repay the government's loan in December.
Lowe’s (LOW) said it suffered a steeper-than-expected 30% decline in third-quarter earnings. The second-largest U.S. home improvement retailer said it made 23 cents a share, missing estimates by a penny. Lowe’s said its revenue slumped 3% to $11.37 billion, narrowly exceeding the Street’s view of $11.28 billion.
Cisco Systems (CSCO) sweetened its bid for video conferencing equipment maker Tandberg by 10%, now valuing the Norwegian company at $3.41 billion. Cisco said its new offer represents the “final price” for Tandberg and has been accepted by owners with more than 40% of the company’s shares, including Tandberg’s two largest shareholders.
Intel (INTC) boosted its quarterly dividend by 12.5% to 15.75 cents per share.
Data Dump
The Commerce Department said retail sales rose by a better-than-expected 1.4% in October. Excluding autos, sales were up just 0.2%, missing economists’ forecasts.
Meanwhile, the Empire State manufacturing index slumped to a 23.51 reading for November, down from 34.57 the previous month and missing the Street’s expectation for a reading of 30.
Also, the government said business inventories slid 0.4% in September, half as much as economists had projected.
Global Markets
European markets jumped more than 1% across the board. The U.K.'s FTSE 100 rose 1.63% to 5382.67, France's CAC 40 gained 1.5% to 3863.16 and Germany's DAX climbed 2.07% to 5804.82.
Asian markets closed higher overnight, led by China's Shanghai Composite, which jumped 2.74% to 3275.05. Japan's Nikkei 225 advanced 0.21% to 9791.18 and Hong Kong's Hang Seng gained 1.73% to 22,943.98.
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