(RTTNews) - Stocks saw notable gains on Monday, as continued indications of low interest rates from Federal Reserve Chairman Ben Bernanke and better-than-expected news from the retail sector generated considerable buying interest. The major averages all finished the day in positive territory by comfortable margins, setting fresh yearly highs.

This afternoon, Fed chief Ben Bernanke reassured the markets that a number of accommodative policies, including near-zero interest rates, would remain in effect for an extended period. He also noted that the Fed is attentive to the declining U.S. dollar, but will continue to focus on its objective of maximum employment and price stability.

“Our commitment to our dual objectives, together with the underlying strengths of the U.S. economy, will help ensure that the dollar is strong and a source of global financial stability,” Bernanke said.

Early strength in stocks came following news from the Commerce Department that retail sales increased by 1.4 percent in October following a revised 2.3 percent decrease in September. Economists had expected sales to increase by 0.9 percent compared to the 1.5 percent decrease originally reported for the previous month.

Excluding a 7.4 percent increase in auto sales, retail sales increased by a much more modest 0.2 percent in October compared to a 0.4 percent increase in the previous month. The ex-auto sales growth came in below economist estimates of a 0.4 percent increase.

In a separate report, the Commerce Department said that business inventories fell by 0.4 percent in September following a revised 1.6 percent decrease in August. Economists had been expecting inventories to decrease by 0.7 percent compared to the 1.5 percent drop originally reported for the previous month.

Also on the economic front this morning, the Federal Reserve Bank of New York released a report showing that conditions for New York manufacturers continued to improve in November, although the pace of improvement slowed by more than economists had been expecting.

While the major averages gave back some ground in the latter part of the trading day, they managed to hold onto strong gains. The Dow closed up 136.49 points or 1.3 percent at 10,406.96, the Nasdaq advanced by 29.97 points or 1.4 percent to 2,197.85 and the S&P 500 rose by 15.82 points or 1.5 percent to 1,109.30.

Sector News

Resource stocks were some of the day’s strongest performers, with steel, oil service and gold stocks spearheading the gains in the sector.

Steel stocks rallied following indications of increased global demand, while oil service and gold stocks rose along with the price of their related commodities on the NYMEX. Oil rose by $2.54 to $78.89 a barrel and gold gained $22.50 to close at $1,139.20 an ounce.

Health insurance stocks also posted strong gains, with the Morgan Stanley Healthcare Payor Index rising by 1.9 percent. The advanced lifted the index to its best finish in over a year.

WellCare Health Plans (WCG) was one of the sector’s strongest percentage gainers, climbing by 3.4 percent. The stock ended the session at its highest closing price in over thirteen months.

Significant strength was also visible in a variety of other sectors, reflecting broad buying interest. Housing, commercial real estate, transportation, and semiconductor stocks posted notable gains.

Dow Components

Boeing (BA) was the leading percentage gainer in the Dow, rising by 3.6 percent. With the gain, the stock ended the session at its closing best price in roughly a month.

Caterpillar (CAT), American Express (AXP), Merck (MRK), United Technologies (UTX) and DuPont (DD) also advanced, reaching their highest closing levels in over a year. Further, Hewlett Packard (HPQ) closed up 0.9 percent, ending the day at its best closing price in nearly two years.

On the downside, Bank of America (BAC) and Travelers (TRV) saw modest losses on the day, sliding by 0.1 percent and 0.3 percent, respectively. Bank Of America remained rangebound, while Travelers backed further off the nearly two-year closing high set last week.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region closed higher on Monday. Hong Kong’s Hang Seng Index rose by 1.7 percent, while Japan’s Nikkei 225 Index edged up by 0.2 percent.

The major European markets also closed notably higher, with the U.K.’s FTSE 100 Index and the German DAX Index rising by 2 percent and 2.1 percent, respectively, while the French CAC 40 Index advanced by 1.5 percent.

In the bond markets, treasuries rallied amid further indications of low interest rates. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, closed at 3.331 percent, posting a loss of 9.8 basis points.

Looking Ahead

Tuesday, data on producer prices, industrial production and housing market conditions are likely to garner some attention, along with comments on the economic outlook from Richmond Federal Reserve President Jeffrey Lacker.

Trading could also be impacted by reaction to quarterly results from Home Depot (HD) and Target (TGT), which are both due to release their results before the start of trading.

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Posted in Categories: Economy, Eurozone, Japan, Releases, USA.

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