NEW YORK, Nov. 23 (Xinhua) -- U.S. stocks surged more than one percentage point Monday, sending the Dow Jones Industrial Average up over 130 points to a 13-month high, as sales of U.S. homes increased more than forecast and the Dollar Index fell for the first time in three days.
The St. Louis Federal Reserve President, James Bullard, said on Sunday he favored the U.S. central bank seeking authority to continue buying mortgage-backed securities after the first quarter of the next year, to bolster bank liquidity. The U.S. dollar, therefore, fell 0.7 percent against major currencies on speculation that interest rates would remain low for an extended period.
The falling dollar pushed prices for gold and other commodities sharply higher. Gold futures touched a record of 1,174 dollars announce as the slumping dollar boosted gold's appeal as an alternative asset. Copper rose to levels not seen for 14 months. And the crude oil was little changed after briefly creeping back up to 79 dollars a barrel.
The spike in commodities lifted energy and materials producers. Chevron Corp. rose 2.6 percent to 78.74 dollars a share, which was among the best Dow components.
Meanwhile, a report showing a big jump in home sales renews the market's optimism about the economy.
The National Association of Realtors said home sales rose 10.1 percent in October to the highest level since February 2007, spurred by a tax credit for first-time homebuyers. Economists had expected a 1.4 percent increase in sales.
"The reading helped to ease concerns about the housing market generated last week when another report showed housing starts fell sharply in October," said Theodore Weisberg, president of Seaport Securities, member of New York Stock Exchange (NYSE).
Moreover, concern about economic growth was also alleviated, as Charles Evans, president of the Fed Bank of Chicago, said he saw little risk that the economy would slide back into recession, although unemployment is unlikely to fall until next summer.
The Monday rally helped the equity market end a three-day losing streak and pushed the Dow industrials to reach a 13-month high, but the volume was light, which some investors read as a lack of conviction.
Theodore indicated that the recent growth of the stock market was partially driven by traders, saying "We have many retail investors and they hesitate to come back to the market, because we still have a lot of uncertainties."
However, Theodore predicted the market is likely to continuously move forward, as investors who have missed the huge rally since March are closely watching and seeking buying opportunities.
Investors will get plenty of economic data during the holiday-shortened week to sort through and determine if the stock market's rally has outpaced actual economic rebound. Multiple reports on the housing market and strength of the consumer as well as data on the nation's total economic output in the third quarter will be released before the Thanksgiving holiday Thursday.
The Dow rose 132.79 or 1.3 percent to 10,450.95, which is its highest close since Oct. 2, 2008. The Standard & Poor's 500 index rose 14.86 or 1.4 percent to 1,106.24, while the Nasdaq composite index rose 29.97 or 1.4 percent to 2,176.01.
