Stocks climb as falling dollar boosts commodities

NEW YORK -Stock buying picked up momentum Tuesday as rising commodity prices and reports on manufacturing and housing pointed to a rebound in the economy.

Major stock indicators rose more than 1 percent, including the Dow Jones industrial average, which added 150 points. The Dow traded above 10,500 for the first time since October last year.

The weakening dollar again boosted stocks, a pattern that has been repeated for months. A cheaper U.S. currency helps strengthen foreign demand for commodities, which in turn bolsters the value of energy and materials stocks.

Economic reports were mixed, but still pointed to a strengthening trend in the economy.

The Institute for Supply Management, a trade group, said its index of manufacturing activity fell to 53.6 in November from 55.7 in October. The figure was short of the 55 analysts polled by Thomson Reuters had expected, but still signaled growth.

Some of the measures within the report improved. New orders, an indicator of future production, rose and the index's employment measure grew for the second straight month after sliding for more than a year.

The snapshot of U.S. factories followed report from a Chinese industry group that said manufacturing activity grew in November for the ninth consecutive month.

Separately, the National Association of Realtors said its seasonally adjusted index of sales agreements rose 3.7 percent in October from September. It was the strongest level since March 2006 and a gain of nearly 32 percent from a year earlier. Economists had expected the index would fall.

The government said construction spending rose 0.04 percent in October, the first increase in six months.

The reports gave investors new confidence that a nearly nine-month rally in the stock market still has legs thanks to continued signs of expansion in the economy. The Dow jumped 6.5 percent in November, its best monthly gain since July. It's up 58 percent from a 12-year low in March.

Richard Ross, global technical strategist at Auerbach Grayson in New York, said the drop in the dollar and jump in riskier assets like commodities signals investors aren't willing to give up on the market's surge even if they have concerns it might be overdone.

"It speaks to that sort of bullish undercurrent," he said. "Whether it's misplaced optimism, that's another question."

In midafternoon trading, the Dow rose 148.28, or 1.4 percent, to 10,493.12. The Standard & Poor's 500 index gained 15.27, or 1.4 percent, to 1,110.90, while the Nasdaq composite index rose 35.71, or 1.7 percent, to 2,180.31.

The ICE Futures U.S. dollar index, which measures the greenback against a basket of foreign currencies, fell 0.7 percent.

Crude oil rose $1.07 to $78.35 per barrel on the New York Mercantile Exchange. Gold rose.

Industrial names rose as commodities advanced after the reports on manufacturing and construction.

Aluminum producer Alcoa Inc. rose 39 cents, or 3.1 percent, to $12.91. It was one of the biggest gainers among the 30 stocks that make up the Dow industrials.

Freeport-McMoRan Copper & Gold Inc. rose $1.94, or 2.3 percent, to $84.74.

Energy stocks also rose. Schlumberger Ltd., which provides services to oil companies, rose $1.60, or 2.5 percent, to $65.49.

Home builders climbed on the day's economic reports. Beazer Homes USA Inc. advanced 19 cents, or 4.4 percent, to $4.49. Pulte Homes Inc. rose 26 cents, or 2.8 percent, to $9.40.

The Russell 2000 index of smaller companies rose 10.50, or 1.8 percent, to 590.23.

Five stocks rose for every one that fell on the New York Stock Exchange, where volume came to 652.6 million shares compared with 585.9 million shares traded at the same point Monday.

Overseas markets jumped as fears eased about Dubai's credit problems. The emirate's government investment company said it was looking at restructuring part of its $60 billion in debt.

Japan's Nikkei stock average added 2.4 percent. Britain's FTSE 100 rose 2.3 percent, Germany's DAX index advanced 2.7 percent, and France's CAC-40 rose 2.6 percent.