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S&P 500 climbs to 13-month high as commodities rally on China

November 12, 2009|Bloomberg News

The broad stock market rally resumed Wednesday, sending the Standard & Poor's 500 index to a 13-month high, after China reported a surge in industrial production and Federal Reserve officials signaled that interest rates will remain at a record low.

Home builder stocks jumped after a report of surging orders at Toll Bros.

Gold rose for an eighth day in a row to another record high.

China's industrial output jumped 16.1% last month, more than expected. And Japan reported that machinery orders shot up 10.5% in September from a month earlier.

Richard Fisher, president of the Fed Bank of Dallas, said late Tuesday that economic growth and inflation might persist below ideal levels into 2011, making the central bank's current interest-rate stance "appropriate."

Janet Yellen, head of the San Francisco Fed, raised the prospect of a "jobless recovery" in a speech in Phoenix, while Atlanta Fed chief Dennis Lockhart predicted a "relatively subdued pace of growth" this quarter and beyond.

The central bank's rate-setting committee last week reiterated a pledge to keep the benchmark interest rate near zero for an "extended period."

"The Fed continues to believe that the biggest economy in the world can't handle rates above 0.25%," Peter Boockvar, an equity strategist at Miller Tabak & Co., wrote in an e-mail to clients. " 'Damn the torpedoes, full speed ahead' will remain policy."

The Dow Jones industrial average, the only major U.S. stock index to rise Tuesday, added 44.29 points, or 0.4%, to close at 10,291.26, its highest close since October 2008.

The S&P 500 rose 5.50 points, or 0.5%, to 1,098.51. The Nasdaq composite climbed 15.82 points, or 0.7%, to 2,166.90.

Almost two stocks gained for each that fell on the New York Stock Exchange.

Financial shares in the S&P 500 climbed 1.4%, the steepest gain among 10 broad industry groups.

Shares of Bank of America and Wells Fargo advanced 2.5%, while Goldman Sachs Group added 1.9%.

All 12 stocks in a gauge of home builders advanced, sending the index up 6.9%.

Toll Bros., the nation's largest builder of luxury homes, climbed 16% after saying orders surged 42% in the latest quarter as its earnings topped expectations.

Pulte Homes, KB Home, Lennar and D.R. Horton each rose at least 5.7% for four of the top five gains in the S&P 500. Retailer Home Depot climbed 1.8%.

Near-term gold futures rose $12.10 to $1,114 an ounce, a record close, in New York after topping $1,119 during the trading day.

The Treasury market was closed for Veterans Day.

In other market highlights:

* Macy's fell 8.1%. The department-store giant posted a third-quarter loss on lower sales and forecast full-year earnings that trailed analyst estimates.

* fell 3.6%, its first decline in eight days, after Credit Suisse downgraded the online travel agency to "neutral" from "outperform."

* Clearwire tumbled 15%. Bank of America analysts said the wireless carrier would have to raise $2 billion to $3 billion over the next two years as the company continued building its high-speed data network.

* Flowers Foods slumped 5.9% after the maker of Nature's Own baked goods reported worse-than-expected third-quarter earnings.

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