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Some argued that Wednesday would be the week's first "real" trading day, given many participants took vacation on Monday and Tuesday, when fixed-income markets were closed in observance of Veterans Day. If Wednesday reflects market reality, the takeaway is that there's still strong demand for stocks and the multiyear bull market in gold remains very much alive.

After falling slowly in five of the past six trading days, the

Dow Jones Industrial Average

rose 1.1% to 9484.83, the

S&P 500

climbed 1.1% to 1058.53, while the

Nasdaq Composite

gained 2.2% to 1973.11. Major averages all ended within close proximity of multimonth highs reached Nov. 3 for the Dow and S&P, and Nov. 6 for the Comp.

Advancing stocks bested decliners by 3 to 1 in

Big Board

trading and 22 to 9 in over-the-counter action, but volume didn't jump as dramatically as the averages; nearly 1.3 billion shares were exchanged in the former and 1.8 billion in the latter.

The advance came ahead of some key earnings -- including from

Applied Materials

(AMAT) - Get Applied Materials, Inc. Report

after the close and retailers on Thursday -- and a slew of economic reports due Thursday and Friday.

Prior to its earnings, Applied Materials rose 2.9% to $25.44, helping the Philadelphia Stock Exchange Semiconductor Index jump 3.4%. After the close, AMAT reported fiscal fourth-quarter earnings of 6 cents per share, excluding one-time items, its first profit in a year and a penny ahead of consensus estimates. More importantly, it said orders for the January quarter should be up 20%. Its shares were recently trading above $25.60 in after-hours trading.

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In addition to semis, the advance was paced by biotech stocks, which recovered from recent weakness despite disappointing trial results from

VaxGen

(VXGN)

, which fell 4.9%. The Amex Biotech Index rose 2.9%.

Reflecting the market's upbeat mood, shares of

Ford

(F) - Get Ford Motor Company Report

jumped 6.1% to $13.06 on 343% of its average volume for the past 30 days, according to Baseline. S&P downgraded the automaker's credit rating to triple-B-minus, one notch above junk status, but investors seemed relieved S&P moved Ford's outlook to stable.

As impressive as gains were for equities, they paled in comparison with those of precious metals, demonstrating again that the two asset classes can

rise in tandem. Gold futures jumped 1.8% to $395 per ounce, their highest close since March 1996. Silver futures surged 5.3% to $5.335 per ounce, their highest level since early September. The Philadelphia Stock Exchange Gold & Silver Index rose 5.6% to a 52-week high of 101.86.

Gold Also Rises

As noted in

RealMoney.com's

Columnist Conversation, this long-running bull market in gold has occurred almost without any support from Wall Street. Indeed, hard-core gold bugs believe Wall Street has conspired to suppress gold's rise, but that's another story that seems to be undermined by the metal's prolonged strength in recent years.

Given gold's nasty bear market in the 1990s and the relatively modest market cap of mining stocks, the sector has no natural constituency among mainstream firms or the financial media. The entire market cap of stocks in the XAU is less than that of many individual tech bellwethers, which the entire financial community still spends an inordinate amount of time focusing on, at the expense of other areas.

More deals such as the recent $1 billion secondary offering by

Newmont Mining

(NEM) - Get Newmont Corporation Report

-- led by J.P. Morgan and UBS -- may change Wall Street's opinion on the sector. Also, gold bulls believe the rollout of the much-anticipated gold exchange-traded fund will increase the metal's appeal to pension funds and other investors.

If and when those developments unfold, there could be some real fireworks in the precious metals, advocates say. Still, sentiment on Wall Street remains skeptical, albeit less dismissive than in recent years.

Factors contributing to the ongoing strength in precious metals include a sense that the

Federal Reserve

is going to allow -- even foster -- a resurgence of inflationary pressures in its desire to avoid the low-probability risk of a Japanese-style deflationary cycle.

Despite a lot of

debate on the timing of future Fed tightening, fed fund futures see very little chance of the central bank raising rates before March. (Conversely, a sense that the Fed is going to remain highly accommodative is helping fuel continued zeal for equities.)

Weakness in the dollar, a side-effect of the Fed's policies and the rising U.S. budget deficits, are also contributing to demand for gold and silver. The dollar rose to 108.825 yen from 108.78 late Tuesday but the euro jumped to $1.1638 from $1.1507.

In the absence of major U.S. economic data, currency traders focused on more signs of strength in the U.K., where the unemployment rate fell to its lowest level since 1975. The Bank of England raised its inflation forecast, increasing the likelihood of more rate hikes in the months ahead. Such a move may pressure the European Central Bank to follow suit, which would increase the yield differential between the fed funds rate and those offered by other major central banks.

The dollar's near-term fate likely will be determined by forthcoming economic data, including the September trade balance report on Thursday. Economists expect the U.S. deficit to widen to $40.5 billion from $39.2 billion last month.

Concerns about rising global trade tensions also have contributed to gold's allure. In addition to the imbroglio over the Bush administration's tariffs on imported steel, the administration is under pressure to stem the flood of cheap Chinese imports.

"Once on the slippery path of protectionism, obviously attempts to brake don't work well," commented Sy Harding in his latest

Street Smart Report

.

Geopolitical developments further contributed to weakness in the dollar and strength in precious metals, especially gold. At least 24 people were killed by a truck bomb at an Italian military base in southern Iraq. U.K. Foreign Secretary Jack Straw told the BBC that coalition forces may transfer power back to Iraqis sooner than expected.

Tuesday, U.S. civilian administrator Paul Bremer was reportedly called back to Washington to discuss such a possibility with Secretary of State Colin Powell.

Such geopolitical issues also aided demand for Treasuries. Amid strong demand for Wednesday's auction of $16 billion in five-year notes and ahead of Thursday's auction of $18 billion in 10-year notes, the price of the benchmark Treasury rose 13/32 to 98 28/32, its yield falling to 4.39%.

Aaron L. Task writes daily for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He invites you to send your feedback to

Aaron L. Task.