Stocks surge to '09 highs as Dow jumps 200 points

• By Peter McKay
• On 4:45 pm EST, Monday November 9, 2009

NEW YORK (MarketWatch) -- U.S. stocks jumped to fresh 2009 highs on Monday, with energy and materials pacing the gains, as confidence about the global economy solidified after the Group of 20 meeting during the weekend.

The Dow Jones Industrial Average (DJIA - News) rose 203.52 points, or 2%, to 10,226.64 -- its best finish since Oct. 3, 2008 and the second 200-point gain in three trading days. The blue-chip measure has risen 4.7% over the four-day winning streak that began with the Federal Reserve's policy statement last Wednesday, which quelled fears that the central bank might raise rates soon.

The S&P 500 Index (NasdaqGS:SPX - News) added 23.78 points, or 2.2%, to 1,093.08.

The Nasdaq Composite Index (COMP - News) rose 41.62 points, or 2%, to 2,154.06.

The U.S. Dollar Index (DXY - News) dropped more than 1%, as the dollar fell against all six foreign denominations included in the measure. The greenback also traded lower against every major world currency not in the index. However, 10-year Treasury notes were 5/32 higher, to yield 3.488%. More on Monday's bond market action.

"You don't want to be left out of a market where you're seeing the prospects for substantially higher earnings, low interest rates and ample liquidity," said J. Stephen Lauck, chief executive and portfolio manager at Ashfield Capital Partners. "You don't want to be left out of that because stocks are likely to head higher in that environment."

Gold rose to a new record of $5.70 a troy ounce, or 0.52%, to $1,100.80, oil futures snapped two days of losses and the dollar fell.

Crude futures climbed $2, or 2.6%, to $79.43 a barrel in New York on concerns about possible damage to offshore drilling and transport facilities from Tropical Storm Ida swirling in the Gulf of Mexico.

The stock market drew some support from a weekend meeting of G-20 finance ministers, which finished with consensus that the global recovery remains on fragile ground and that stimulus efforts should continue awhile longer.

The financial sector rose 3.6%, thanks to expectations that low rates will leave banks ample room to make profits in the months ahead.

A record auction of $40 billion in 3-year U.S. Treasury notes saw strong bidding, suggesting that the U.S. government remains able to finance its relief efforts at favorable prices.

"We're clearly forcing some people off the sidelines the higher the market goes here,", said Joe Williams, director of equity strategy at Commerce Trust. "But I think there's room for it to last awhile longer. We probably have another 300 to 500 points to go before valuations really get stretched."

Among Dow components, General Electric (NYSE:GE - News) led the way, up 2.8%. The conglomerate and Comcast Corp. have settled on how to value NBC Universal, clearing a key obstacle to giving Comcast control of GE's television and movie company, The Wall Street Journal reported, citing people familiar with the matter.

Intel (NasdaqGS:INTC - News) , American Express (NYSE:AXP - News) and Travelers (NYSE:TRV - News) also helped bolster the Dow's gains, climbing more than 2.4% each.

Only two of its 30 components were in the red: Cisco Systems (NasdaqGS:CSCO - News) and Kraft Foods (NYSE:KFT - News) , down 0.9% and 0.9%, respectively. Kraft's decline came as Cadbury (NasdaqGS:CBRY - News) emphatically rejected a $16 billion hostile bid from the food company. More on the Kraft-Cadbury showdown.

Among stocks in focus Monday, RadioShack (NYSE:RSH - News) jumped 14% after it said it will carry Apple Inc.'s (NasdaqGS:AAPL - News) iPhone at a limited number of stores later this month, and stores nationwide will carry the phones beginning in 2010.

McDonald's (NYSE:MCD - News) rose 1.5% after reporting its global same-store sales climbed 3.3% in October.

Wynn Resorts (NasdaqGS:WYNN - News) climbed 6% after unveiling a special dividend of $4 a share and saying it plans to pay a quarterly dividend starting next year.

Some Wall Street veterans are disconcerted at how easily governmental actions have trumped the last throes of the third-quarter earnings season as a catalyst for stocks, underscoring that the stock market still isn't quite back to normal functioning a year after full-blown crisis struck.

"People are still looking for governments to put more air into the market to keep it afloat," said portfolio manager Uri Landesman, of ING Investment Management in New York. "We're happy to see that for now, but the question is what happens when they take it away."

In the meantime, Landesman said he's somewhat disappointed by the market's response to generally favorable third-quarter earnings news. The Dow was nearly flat between the start of the third-quarter earnings season, marked by the release of Alcoa's results, and last week's Fed announcement. Since then, the Dow has risen 2.6%.

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