Wall Street Hits New High for 2010

By: From CBS News
By: From CBS News

WALL STREET -- Stocks indexes reached new highs, a day after the Federal Reserve announced a $600 billion plan to boost the economy.

All three stocks indexes closed at their highest level of the year. The Dow Jones industrial average rose 219 points, or 2 percent, to close at 11,434. That's a new high for the year, toppling yesterday's close of 11,215. The broader S&P 500 index rose 23 points, or 1.9 percent, to 1,221, and the technology-heavy Nasdaq composite gained 37 points, or 1.4 percent to 2,577.

The dollar fell against other currencies as traders anticipated lower U.S. interest rates because of the Fed's massive bond-buying program announced Wednesday. Commodities prices including crude oil rose.

Retailers reported solid sales in October, sending shares of major retailing companies sharply higher. Gap Inc. rose 6 percent while Macy's Inc. jumped 6.6 percent.

“Those retail numbers are telling us that the holiday season is going to get off to a good start,” said Stephen Jones, the chairman of Jones Villalta Funds.

On Wednesday, the Federal Reserve announced it plans to buy $600 billion in bonds in an effort to spur spending and ultimately lower the unemployment rate. The central bank was unusually detailed in its announcement, saying it planned to spend $75 billion a month on bonds until at least the middle of next year. That's on top of the roughly $35 billion a month its already buying.

“Much of today's gains comes as a result of the government pumping money into the market,” said Joe Kinahan, the chief derivatives strategist at TD Ameritrade. The Standard and Poor's index breaking past the psychologically important 1,200 mark may have also brought on another round of buying, he said.

In corporate news, shares of BHP Billiton, the world's largest mining company, rose 5.9 percent after the Canadian government rejected BHP's $38.6 billion bid to buy Potash Corp. of Saskatchewan. After the market closes, Kraft Foods Inc., Starbucks Corp. and CBS Corp. will announce earnings.

The Fed's plan will increase the supply of dollars held by banks and most likely push the value of the currency down. The dollar is at its lowest level since December 2009 against a broad basket of currencies, and was down 0.8 percent against that index Thursday. Energy prices jumped, sending oil up $1.80 to $86.49.

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