Bernanke’s Comments Spur Rally; S&P 500 Shoots above 1,100 – November 16, 2009

Stocks Continue Rally

Stocks climbed to fresh 13-month highs on Monday after comments from Federal Reserve Chairman Ben Bernanke reiterated that interest rates would remain low. The Dow Jones Industrial Average added 136.49 points to cap off the session at 10,406.96. Broader stock indicators also pushed higher before the closing bell. The day started off with some positive news from the Commerce Department. Retail sales jumped 1.4% in October from the prior month. Shares of major retailers advanced following the better-than-expected news. Another report showed that manufacturing activity in New York State slowed in November. Energy and commodity shares led gainers as the weak U.S. dollar sent gold and oil prices higher. Oil for December delivery jumped $2.55 to close at $78.90 a barrel. Gold surged $22.50 to end at a new record of $1,139.20 an ounce. Investors also hailed data showing surprisingly strong economic third-quarter economic growth in Japan. In other news, bank analyst Meredith Whitney said she does not believe the US equities rally is based on fundamentals. Her comments caused stocks to pare some of their gains.

Word on the Street

• Federal Reserve Chairman Ben Bernanke spoke to the Economic Club of New York and weighed in on a number of significant economic challenges facing the recovery. The dollar briefly erased its loss against the euro after Bernanke said he will work to help keep the greenback strong.
• Is the Bernanke Doctrine a Disaster?
• Video — Bernanke Speaks
• With the holiday season looming, all eyes are on retail sales. The Commerce Department reported that retail sales rose 1.4% in October, after falling 2.3% in September. Many of the gains came from a jump in sales of automobile and vehicle parts.
• Are Consumers Turning to Retail Therapy?
• United Parcel Service Inc. (UPS) said it expects to ship about 400 million packages worldwide between Thanksgiving and Christmas, a figure it described as “up slightly” from 2008.
• According to a recent report from the US Department of Agriculture, more Americans are feeling the economic pinch in their stomachs. More than one in seven American households struggled to put enough food on the table in 2008, the highest point since the government began surveying in 1995.
• General Motors Co., signaling confidence in its recovery from bankruptcy, said it generated $3.3 billion in cash in the third quarter and plans to start repaying government loans early. This all sounds good, but don’t get too excited about the automaker’s promise.
• Why GM Is Repaying Bailout Money?
• Cisco Systems Inc. (CSCO) is still courting Tandberg ASA with a $3.39 billion offer after winning only about 40 percent of the Norwegian company’s shares on its original $3 billion bid. Here’s why Cisco decided to sweetened the deal.
• Lowe’s Cos. (LOW), the second-largest US home-improvement retailer, posted third-quarter profit that met analysts’ estimates, but scaled back its full-year projections.
• Lowe’s Profit Falls 30 Percent
• Surprise! More than 15 million may owe taxes on tax break because the government was too generous with their new Making Work Pay tax credit

Other Juicy Tidbits

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• Quiz: How Much Do You Know About Green?
• If your bank fails, will you be ready? — More than 100 banks have gone belly up in 2009 alone. Your bank could be next, so figure out now how much of your money is protected — and how much isn’t.
• Video — Tax Questions Answered