Sam Collins

Big Caps In, Small Caps Out

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There was little in the way of significant news on Monday to impact the market, but what there was cut the Dow Jones Industrial Average's (DJI) recent losing streak to three days. The index registered a triple-digit gain and also broke its high of Nov. 17, putting to rest the thought that a major reversal occurred on that day.

The main cause of the buying was another day of weakness for the U.S. dollar. And this time it cracked the psychologically important level of $1.50 per euro. While some European countries have flirted with the idea of raising interest rates, that thought is apparently not gaining ground at the Federal Reserve.

One of the system's key banks for policy is the St. Louis Federal Reserve Bank, and its president, James Bullard, said in an interview this weekend that the Fed should continue buying mortgage-backed securities past the first quarter of 2010 -- a date that had previously been chosen as a target when rates might be raised.

Another positive in the pre-holiday mood was the National Association of Realtors' report that home resales increased by 10.1% in October. This was in stark contrast to a survey done by Dow Jones Newswires that indicated that an increase of 2.3% was expected. 

Several stocks were in focus with outstanding gains. LDK Solar (LDK) popped 6.9% following news that the Chinese maker of solar wafers and modules registered a big gain for Q3 after three consecutive losses. And Deere & Co. (DE) gained 2% on a rating increase by Morgan Stanley (MS).

All 10 of the major S&P sectors made advances yesterday, with the telecom group leading the pack with a gain of 2.6%.

The Dow rose 133 points to 10,451, the S&P 500 (SPX) gained 15 points to 1,106, and the Nasdaq (NASD) rose 30 points to 2,176. 

Pre-holiday volume was again light with just 980 million shares trading on the NYSE. Advancers on the Big Board led decliners by a ratio of almost 4-to-1. On the Nasdaq, 591 million shares were exchanged with advancers ahead by 9-to-4.

The weakness in the U.S. dollar again pushed commodities higher. Crude oil for January delivery gained 11 cents to $77.56 a barrel, and the Energy Select Sector SPDR (XLE) closed at $57.33. 

December gold rose $17.90 to close at $1,164.70 an ounce, as the flight from the dollar continued to nudge precious metals higher. The PHLX Gold/Silver Sector Index (XAU) closed at $186.99, up $2.71.