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Interactive Are Stocks Bouncing Back?

NEW YORK (AP) -- A weaker dollar and better-than-expected data on the housing market sent investors moving back into stocks Monday after a three-day losing streak.

Major stock indexes soared more than 1.5 percent in early trading, including the Dow Jones industrials, which rose about 150 points.

A report showing a big jump in home sales reinvigorated investors after disappointing reports on the housing industry last week brought concerns about the strength of the recovery.

The National Association of Realtors said home sales rose 10.1 percent in October to the highest level in two and a half years, spurred by a tax credit for first-time homebuyers. Analysts had been expecting a 1.4 percent increase. The credit, which was due to end at the end of the month, was subsequently extended into 2010.

Stocks had been rising sharply prior to the report on the back of a weaker dollar. The falling dollar pushed prices for gold, oil and other commodities higher, boosting energy and material stocks. A weaker dollar makes commodities cheaper for foreign buyers. Bond prices fell slightly as investors stepped up their appetite for risk.

The dollar retreated as Federal Reserve official James Bullard said the central bank should continue to buy mortgage-backed securities after the program is supposed to expire in March. That would continue to keep interest rates low.

Low interest rates and a resulting decline in the dollar have been big drivers behind the stock market's eight-month rally. Low interest rates enable investors to borrow cheaply and buy assets like stocks and commodities that have the potential to earn higher yields than cash.

Investors resumed their buying of stocks Monday after putting on the brakes late last week on worries about the strength of the economy. The decline in stocks had boosted safe-haven assets like the dollar. Analysts say investors will continue to look for dips in the rally as a way to get into the market, not wanting to end the year without participating in some of the big gains stocks have made this year.

The Dow Jones industrial average rose 150.85, or 1.5 percent, to 10,469.01. The Standard & Poor's 500 index rose 18.04, or 1.7 percent, to 1,109.42, while the Nasdaq composite index rose 35.78, or 1.7 percent, to 2,181.82.

More than eight stocks rose for every one that fell on the New York Stock Exchange, where volume came to 284.8 million shares, compared with 466.2 million at the same time on Friday.

The ICE Futures U.S. dollar index, a widely used measure of the dollar against other currencies, fell 0.8 percent in morning trading. As the dollar fell, gold prices surged to a new high of $1,174 an ounce. Oil prices jumped $2 to $79.47 a barrel on the New York Mercantile Exchange.

Bond prices fell as investors bought stocks. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.39 percent from 3.37 percent late Friday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.03 percent from 0.01 percent. The yield on the three-month bill briefly dipped into negative territory last week as demand for safe havens rose.

The market has been weighing concerns about the economy against the desire to take advantage of low interest rates to buy high-yielding investments. At the end of last week, worries about the economy took hold after a weak report on housing and a disappointing outlook from computer maker Dell Inc. Investors retreated to safe havens like the dollar and government debt as they sold stocks.

The Dow was roughly flat for the week, finishing up 0.5 percent, while broader indexes fell.

Investors will get plenty of economic data this week, which is shortened by the Thanksgiving holiday, that will help them determine if the stock market's rally has outpaced any actual recovery in the economy. More reports on the housing market, as well as data on consumer confidence, durable goods orders and a revised report on third-quarter gross domestic product will be released before Thursday.

In overseas trading on Monday, Britain's FTSE 100 rose 1.9 percent, Germany's DAX index soared 2.5 percent, and France's CAC-40 jumped 2.4 percent. Markets in Japan were closed for a holiday.

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