Stock Market and Investing and Banking & Finance

Major stock indexes climb to yearly highs

November 9, 2009

Stocks jumped to new highs for the year Monday as the dollar extended its slide, boosting prices for commodities including gold and oil. Energy and materials stocks led the market higher.

Investors bought stocks for a fourth straight day on growing confidence about the global economic recovery, getting a shot of optimism from news this weekend that the Group of 20 countries will keep stimulus measures in place. Investors saw the agreement as a signal that interest rates would remain low. Major stock indexes rose as much as 2 percent, including the Dow Jones industrial average, which jumped 203 points.

Investors around the world are seeing the dollar as weaker than other currencies because of low U.S. interest rates, and so they're using it for what's known as "carry trade," to finance purchases of investments in other countries. That trend takes the dollar down when those purchases are made.

Some analysts are questioning the markets' moves, and warn that stocks and other investments could suffer big losses if the dollar were to turn higher.

Many investors like a weaker dollar because it helps U.S. exporters by making their goods cheaper to overseas buyers and giving the companies a boost when they convert profits from abroad to dollars.

The ICE Futures U.S. dollar index, which measures the greenback against a basket of foreign currencies, fell more than 1 percent to its lowest level in 15 months. The dollar rose last year and early this year but the index has been sliding for the past eight months since major stock indicators bounced off 12-year lows. Investors, although they've been basing most of their buy or sell decisions on the economy, have also been following a pattern of funneling money into stocks when the dollar weakens and pulling it out when the currency rises.

The Dow rose 203.52, or 2 percent, to 10,226.94. The index topped its previous 12-month trading high of 10,119.46, set Oct. 21.

The broader Standard & Poor's 500 index rose 23.78, or 2.2 percent, to 1,093.08, its sixth straight advance. The NASDAQ composite index rose 41.62, or 2 percent, to 2,154.06.

Five stocks rose for every one that fell on the New York Stock Exchange, where volume came to 900.9 million shares compared with 887.9 million shares traded at the same point Friday.

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