Wall Street surges to new 13-month high
Dow climbs after G-20 pledges further aid to world economies
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Tuesday, November 10, 2009
Wall Street reached a new high for the year Monday, surging after world finance leaders pledged to keep fiscal stimulus efforts in place until an economic recovery has been assured.
The Dow Jones industrial average jumped to its highest level since October 2008, climbing 2 percent, or 203.52 points, to close at 10,226.94. Since the beginning of the year, the blue-chip index has gained more than 16 percent.
After a weekend meeting in St. Andrews, Scotland, finance ministers and central bank governors from the Group of 20 nations, known as the G-20, said that although economic conditions have improved, the recovery has been uneven and high unemployment remains a major concern. "To restore the global economy and financial system to health, we agreed to maintain support for the recovery until it is assured," a statement issued by the group said.
The statements were seen as an encouraging sign that efforts to prop up world economies would not be withdrawn soon, said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. "It's basically government saying, we're going to cover your back, take a risk," he said.
That helped lift stocks Monday. The broader Standard & Poor's 500-stock index climbed 2.2 percent, or 23.78 points, to 1093.08 , while the technology-heavy Nasdaq gained nearly 2 percent, or 41.62 points, to close at 2154.06.
Overseas markets also rallied, including Britain's FTSE and the CAC 40 in France, which each rose about 2 percent.
In the United States, the rally was broad-based with shares of financial and industrial companies recording some of the strongest gains. American Express's stock was up 4.9 percent, while Caterpillar's gained 4.2 percent.
Investors also poured into gold, which rose $5 to $1,101 a troy ounce. Crude oil prices were up 2.5 percent, to $79.41 a barrel. That lifted energy stocks. ConocoPhillips and Exxon were up about 1.4 and 1 percent, respectively.
But the dollar remains weak, falling against major currencies Monday. The euro and the British pound were up nearly 1 percent against the greenback Monday. The dollar has been weighed down by concerns about the sustainability of the growing U.S. deficit, and traders are now using cheap dollars to buy other higher-yielding foreign currencies, analysts said.
