Dow at 13 month high WOOHOO!!
The recovery from the Great Recession has likely started. But many economists are worried about falling into another downturn. Here's what has them concerned.
NEW YORK (CNNMoney.com) -- Stocks surged Monday, with the Dow touching its highest point in more than a year in light, pre-Thanksgiving trading, on a strong housing report and a rally in commodities.
The dollar's weakness versus the euro helped lift gold to another record, putting the precious metal within $36 of $1,200 an ounce.
The Dow Jones industrial average (INDU) gained 122 points, or 1.2%, with roughly 90 minutes left in the session. The Dow rose as much as 177 points in the morning, hitting 10,495.61 -- the highest trading level since Oct. 3, 2008.
The Nasdaq composite (COMP) climbed 36 points, or 1.7%. The S&P 500 (SPX)jumped 18 points, or 1.7%.
Stocks had slipped for the last three sessions, ending last week mixed, as investors pulled back a bit after pushing the Dow to a 13-month high. But Monday's news brought a new wave of buying.
"The market is still in the euphoric state, with people coming to the realization that they can't keep much, if anything in money markets or cash," said Matt King, chief investment officer at Bell Investment Advisors. "Investors are trying to pick up riskier assets and get some yield on those assets."
He said that after October's slight pullback, November has clearly been another up month for investors, with the S&P 500 climbing around 6%. And, King added, there is little on tap between now and year end to disrupt the flow, although the pace of gains are likely to slow.
Since bottoming at a 12-year low on March 9, the Dow has gained 57.6% as of Friday's close. In that same period, the Nasdaq gained 69% and the S&P 500 gained 62%.
Trading is expected to lighten up in each session leading up to Thursday's Thanksgiving holiday. All financial markets will be closed Thursday and stocks will close early on Friday.
Market breadth Monday was positive and trading volume was light. On the New York Stock Exchange, winners beat losers nearly four to one on volume of 600 million shares. On the Nasdaq, advancers beat decliners by more than two to one on volume of 1.27 billion shares.
Housing: Existing home sales in October surged to the highest level since February 2007, according to a National Association of Realtors report released Monday morning.
Sales rose 10.1% in October to a seasonally adjusted annual rate of 6.1 million units, verses a revised 5.54 million units in September. Economists expected sales of 5.7 million units, on average.
The strong sales were largely driven by buyers trying to tax advantage of the government's first-time homebuyer tax credit, which was initially due to expire at the end of November. The credit has now been extended to the end of April and includes a broader range of buyers.
Investors have been looking for the economic news to confirm what many economists say: The recession, which began in December 2007, is over. In particular, a recovery in the housing market is critical as the credit crisis and housing market collapse deepened the economic crisis.
On the move: Stock gains were broad based Monday, with 28 of 30 Dow issues rising, led by Boeing (BA, Fortune 500), Caterpillar (CAT, Fortune 500), Chevron (CVX, Fortune 500), IBM (IBM, Fortune 500), 3M (MMM, Fortune 500), Procter & Gamble (PG, Fortune 500) and Exxon Mobil (XOM, Fortune 500).
The Dow's financial shares rallied too, including American Express (AXP, Fortune 500) and JPMorgan Chase (JPM, Fortune 500).
Hewlett-Packard (HPQ, Fortune 500) rallied ahead of its quarterly results due out after the close tonight. Last week, the company said it expects to earn $1.14 per share, up 10% from a year ago.
World markets: Strong markets overseas helped boost U.S. markets. In Europe, London's FTSE 100, the German DAX and France's CAC 40 all surged more than 2%. Asian markets rallied as well.
Currency and commodities: The dollar fell against the euro and gained against the yen.
The dollar's weakness versus the euro gave a boost to dollar-traded oil and gold prices.
U.S. light crude oil for January deliver rose 98 cents to settle at $78.45 a barrel on the New York Mercantile Exchange.
COMEX gold for December delivery climbed $18 to $1,164.70 an ounce after touching a record high of $1174 earlier in the session.
Bonds: Treasury prices fell modestly, raising the yield on the 10-year note to 3.37% from 3.36% Friday. Treasury prices and yields move in opposite directions.
First Published: November 23, 2009: 9:35 AM ET
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