Stocks lifted by data on homes and dollar

NEW YORK - The stock market closed broadly higher yesterday as a weaker dollar and upbeat home-sales numbers encouraged investors to take on more risk.

Major stock indexes soared more than 1 percent, including the Dow Jones industrials, which rose 133 points to a 13-month high. Volume was light as Thanksgiving approached; that likely padded some of the market's advance.

Investors who fled to the safety of the dollar and Treasurys in recent days found plenty of reasons to return to stocks yesterday.

The day's developments pointed to two key trends, a recovering economy, and interest rates that are expected to stay low:

The dollar resumed its long slide, sending prices for commodities including gold and oil higher and, in turn, the stocks of companies that produce them.

The National Association of Realtors reported that October home sales rose more than 10 percent, reviving investors' optimism. That was after disappointing data on the housing industry last week raised concerns about the strength of the economic recovery.

Charles Evans, head of the Federal Reserve Bank of Chicago, was quoted as saying he saw little risk that the economy would slide back into recession, although unemployment is unlikely to fall until next summer. And James Bullard, president of the Federal Reserve Bank in St. Louis, said the U.S. Fed should continue to buy mortgage-backed securities after the program is supposed to expire in March. That would continue to keep interest rates low.

Meanwhile, bond prices retreated as investors regained their appetite for risk.

Low interest rates and the resulting slide in the dollar have been big drivers of the stock market's eight-month rally. Low interest rates allow investors to borrow cheaply and buy assets like stocks and commodities that have the potential to earn higher yields than cash.

The Dow rose 132.79, or 1.3 percent, to 10,450.95, after losing 120 points over the previous three days. It was the Dow's highest close since Oct. 2, 2008.

The Standard & Poor's 500 index rose 14.86, or 1.4 percent, to 1,106.24, while the Nasdaq composite index rose 29.97, or 1.4 percent, to 2,176.01. The index is up 63.5 percent from a 12-year low in March.

The ICE Futures U.S. dollar index, a measure of the dollar against other major currencies, fell 0.7 percent. As the dollar fell, gold prices surged to a new high of $1,174 an ounce. Oil rose 9 cents to $77.56 a barrel on the New York Mercantile Exchange.

The spike in commodities lifted energy companies and materials producers. Chevron Corp. rose $1.97, or 2.6 percent, to $78.74. Wood-products maker Weyerhaeuser Co. gained $1.25, or 3.3 percent, to $39.11.

The National Association of Realtors said home sales rose 10.1 percent in October to the highest level in 21/2 years, spurred by a tax credit for first-time homebuyers. Analysts had been expecting a 1.4 percent increase in sales. The credit, due to end at the end of the month, has been extended into 2010.

In other trading, the Russell 2000 index of smaller companies rose 10.13, or 1.7 percent, to 594.81.

Britain's FTSE 100 rose 2 percent, Germany's DAX index soared 2.4 percent, and France's CAC-40 jumped 2.3 percent. Markets in Japan were closed for a holiday.