New York: The Dow Jones industrial average climbed to its highest close in 14 months on Tuesday as a weak dollar boosted natural resource companies’ shares and economic data reinforced hopes for a sustainable recovery.
Sentiment also got a lift as concerns receded about the impact of Dubai’s debt trouble after news that Dubai World planned to restructure about $26 billion in debt.
The dollar’s decline bolstered shares of commodity-oriented companies like U.S. Steel Corp, up 1.2% at $45.18; Alcoa Inc, up 2.2% at $12.80, and Newmont Mining Corp, up 3.8 percent at $55.66.
Data showed pending sales of previously owned US homes rose more than expected to their highest level in 3-1/2 years in October. The Dow Jones home construction index gained 1.3%.
“People are starting to realize that things are coming back. There are some pockets of weakness, but overall, we’re healing globally, and the overall trend is very positive,” said Thomas Belesis, chief executive officer at John Thomas Financial in New York.
Concerns over a possible debt default by Dubai World triggered a sell-off in stocks globally on Friday.
“Friday’s fears about Dubai were overblown ... Investors know the situation is out there, but they’re putting that aside,” Belesis said.
The Dow Jones industrial average shot up 126.74 points, or 1.23%, to end at 10,471.58. The Standard & Poor’s 500 Index rose 13.23 points, or 1.21%, to 1,108.86. The Nasdaq Composite Index advanced 31.21 points, or 1.46%, to close at 2,175.81.
The US dollar index fell 0.6% as waning anxiety about Dubai limited the greenback’s safe-haven appeal. The index measures the dollar’s performance against a basket of major currencies.
US crude oil futures gained $1.09 to settle at $78.37 a barrel, while the S&P Energy Index advanced 1.4%. Shares of Exxon Mobil Corp shot up 1.3% to $76.04.
In the day’s housing data, sales advanced to their highest level in 3-1/2 years, according to a report from the National Association of Realtors.
Other data showed construction spending was flat in October, above the expectation for it to slide in the month. In addition, the Institute for Supply Management said that the manufacturing sector expanded in November, though the expansion was less than expected.
Staples Inc rose 4.8% to $24.44 after it reported adjusted third-quarter earnings that beat expectations and forecast sales growth in its fourth quarter.
Shares of troubled insurer American International Group Inc jumped 8.6% to $30.84 after it closed a pact with the New York Federal Reserve Bank that slashes its debt under a credit facility by more than half.
Volume was below average on the New York Stock Exchange, with 1.13 billion shares changing hands, under last year’s estimated daily average of 1.49 billion. On the Nasdaq, about 2.19 billion shares traded, below last year’s daily average of 2.28 billion.
Advancing stocks outnumbered declining ones on the NYSE by a ratio of 4 to 1, while on the Nasdaq, about nine stocks rose for every four that fell.