Weak Dollar Inspires Rally on Wall Street

Wall Street put the Dow 10000 mark back in its rearview mirror on Monday as the latest selloff for the crumbling greenback created another burst of buying in energy and basic materials stocks.

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The Dow Jones Industrial Average rose 96.28 points, or 0.96%, to 10092.19 the S&P 500 added 10.23 points, or 0.94%, to 1097.91 and the Nasdaq Composite picked up 19.52 points, or 0.91%, to 2176.32.

Monday's rally, which left all three major indexes at fresh 2009 highs, represents a significant bounce back for the markets after they suffered their steepest daily declines in two weeks on Friday.
“We knew that the selloff would be shallow… but I didn’t expect to see this type of move today. Honestly, I was a bit surprised,” said Peter Kenny, managing director at Knight Capital Markets. "The fact it’s happening at the beginning of earnings season may mean there’s more momentum to this than even the bulls imagined.”

Monday's action is just the latest example of the stock markets moving in the opposite direction of the greenback, which has been hammered in recent weeks as cash flows away from the relative safety of the currency and worries about U.S. debt remain high. The markets have benefited from the weaker dollar in the short-term as traders bet it will boost demand for commodities and make multinationals more competitive.

“We’re still relatively extended. I think it’s going to be very hard to make it through 1100 on the S&P. I think that it's going to be a very difficult bar for the market to hurdle over,” said Michael James, senior equities trader at Wedbush Morgan Securities. The broad S&P 500 flirted with that level late in the day before closing just below it.

At the same time, the dollar weakness pushed crude oil near the $80 threshold. Crude closed up $1.08 a barrel, or 1.38%, to $79.61 -- its highest settle since Oct. 13, 2008. Gold jumped $6.60 an ounce, or 0.63%, to $1057.30.

The gains for Wall Street come as the markets take an optimistic tack ahead of a very busy week of earnings. Even though earnings season officially started two weeks ago with Alcoa's better-than-expected results, it kicks into high gear this week with 140 S&P 500 companies, or 28%, slated to release their results.

The day ends with the Dow Jones Industrial Average (DJIA) near its best levels of the day. The closing gain of 96 points was only 26 points off the highs. The S&P 500 (SPX), Nasdaq Composite (COMP), and Russell 2000 (RUT) all finished with gains close to 1%.