Stocks extend gains as dollar continues to fall
Associated Press
NEW YORK
Stocks rose moderately Monday on growing expectations that the Federal Reserve will take steps to boost the economy.
A falling dollar that contributed to a jump in commodity prices also helped push the Dow Jones industrial average up 31 points to its highest close since late April.
Traders are widely expecting the Fed to expand its program to buy bonds as a way to stimulate the economy. That would push bond yields down and, in turn, would make stocks a more attractive investment.
Bank of America Corp. and JPMorgan Chase & Co. each fell more than 1.5 percent, as the banks again faced questions into how they and other finanancial companies have handled foreclosures. The financial industry joined utilities as the only two segments of the Standard and Poor’s 500 index to lose ground.
For the second time in the past week, the Dow eclipsed its highest closing level this year only to quickly pull back. It closed at 11,205.03 on April 26. The average rose 31.49, or 0.3 percent, to 11,164.05. The broader Standard and Poor’s 500 index rose 2.54, or 0.2 percent, to 1,185.62, and the technology-focused Nasdaq composite index rose 11.46, or 0.5 percent, to 2,490.85.
The National Association of Realtors said sales of previously occupied homes rose 10 percent last month. However, sales remain extremely weak compared with where they were just a year ago, which is likely keeping enthusiasm over the news in check.
Shaun Ahmad, president of capital markets at mortgage investment firm RoundPoint Financial Group, said that though the sales jump was a positive sign, expectations are very low right now and “there’s a significant housing overhang.” Home sales won’t climb back to more historical levels until a large inventory of homes can be sold, Ahmad said.
The dollar fell against other major currencies. It hit a fresh 15-year low against Japan’s yen. The euro again climbed above $1.40 early in the day before sliding back slightly below that level in late trading. Gold rose 1.1 percent.
Traders expect the Fed to buy bonds to stimulate the economy. Though that is expected to make stocks more appealing, it also would put more money into circulation, and investors believe, send inflation rising again.
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