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Dow Closes Above 10,200
By Sung Moss
TheStreet.com Staff Reporter
11/09/09 05:10 PM EST

(Updated with EA earnings news and final quotes.)

NEW YORK (TheStreet) -- The Dow closed at its highest point since October 2008, as global finance officials signaled that economic stimulus would remain in place for the foreseeable future and commodities surged.

The Dow Jones Industrial Average finished 203.5 points higher, or 2%, to 10,226.9. The S&P 500 rose 23.8 points, or 2.2%, to 1093.1, while the Nasdaq advanced 41.6 points, or 2%, to 2154.1.

Currency markets were in focus on Monday as the G-20 meeting in Scotland ended with finance policy-makers reaffirming their desire to preserve stimulus measures. After signaling low rates for the near term, the Dollar Index, a measure that tracks the strength of the dollar against a basket of currencies, reached 15-month lows. It was recently down 1%.

Along with the weakening greenback, commodities prices swelled at midday. Crude oil prices, which were also touched by news of a tropical storm in the Gulf of Mexico, grew $2 to settle at $79.43 a barrel. Gold, which hit a record $1,111.70 earlier, gained $5.70 to settle at $1,101.40 an ounce.

"People are using their dollars to buy more attractive assets," says Chip Hanlon, President of Delta Global Advisors. "Why hold a dollar that pays you nothing, in terms of interest rates, when you can own gold."

Hanlon also notes that the fluctuations may be indicative of both confidence and a lack thereof.

"When the U.S. dollar is falling, everything else is going up, pretty much -- stocks around the world, commodities, etc. And, vice versa, if the dollar is rallying, everything else seems to weaken," says Hanlon. "The market is betting that Washington D.C., through fiscal policy, will be able to engineer economic recovery. If they blow on the straw hard enough, they can create a bubble. But by so aggressively boosting commodities, especially gold, the market is also saying that they don't expect it to be a healthy, sustainable recovery, but an inflation-led recovery that will last as long as the stimulus does."

Analysts also attributed the boost in stocks to the G-20's stimulus message. Gains were seen across multiple industries. The Philadelphia Oil Service Sector Index, the KBW Bank Index, the Philadelphia Gold and Silver Index and the S&P 500 Materials Index advanced 3.3%, 3.5%, 4% and 3.2%, respectively.

Chipmakers and retail also saw positive gains, as the Philadelphia Semiconductor Index went higher by 3.2% and the S&P Retail Index marched up 2%.

Caterpillar (CAT:NYSE) , American Express (AXP:NYSE) , Bank of America (BAC:NYSE) and Du Pont (DD:NYSE) were the biggest gainers on the Dow.

After the closing bell, Electronic Arts (ERTS:NYSE) said it lost $391 million, or $1.21 a share, in the second quarter as sales slumped 12% from the year-earlier quarter. The video game manufacturer posted non-GAAP earnings per share at 6 cents vs. the 7-cent consensus.

Deal news buoyed stocks earlier in the day. According to a report from the Wall Street Journal, General Electric (GE:NYSE) and Comcast (CMCSA:NYSE) have agreed on a price for NBC Universal, valuing the property at $30 billion and setting the stage for a deal. GE shares also gained 3.4%.

Kraft was the only Dow component down on the day, after the food maker said it will take its $16 billion bid for British candy maker Cadbury straight to Cadbury's shareholders. Calling the offer worse than Kraft's original bid, Cadbury's board later recommended rejecting the deal.

Dow component McDonald's (MCD:NYSE) , which reported better overseas sales, added 1.5%.

Several analysts also said the jump in equities may be a delayed reaction to last week's economic news, highlighted by the government's unemployment report on Friday.

"People thought about the employment report and thought it wasn't so bad," says Bill Fleckenstein, president of Fleckenstein Capital Management. "The employment report only reflected what we already knew."

Fred Dickson, chief market strategist at DA Davidson, who also noted the weekend's G-20 meeting as "the story this morning," also cited the improving data as a reason. "The economic news last week was positive or about expected, and that takes about a day or two to digest," he adds.

Stocks overseas went higher on Monday, as the FTSE in London gained 1.8% and the Dax in Frankfurt added 2.4%. In Asia, Hong Kong's Hang Seng rose 1.7%, and Japan's Nikkei was higher by 0.2%.

-- Written by Sung Moss in New York.

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