Sam Collins

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Stocks again hit new highs yesterday, with the S&P 500 (SPX) topping 1,100 for the first time since October 2008, while the U.S. dollar plunged to a 15-month low. 

The fall of the dollar came in direct response to Fed Chairman Ben Bernanke's comment that, "Our commitment to our dual objectives [of maximum employment and price stability], together with the underlying strengths of the U.S. economy, will help ensure that the dollar is strong and a source of global financial stability." 

It all sounded very good, but since his statement lacked a time frame traders concluded that the Fed isn't close to increasing rates in the near future, and they opted for stocks and commodities rather than the dollar. 

Energy and materials stocks were strong yesterday, helped by higher commodity prices.

In the last hour of trading, the financial stocks gave back most of their gains after bank analyst Meredith Whitney said she expects banks to raise another round of capital. The comments created enough selling to drop the diversified financial services group from a gain of 4% down to a gain of 0.4%.

Before the opening, Lowe's (LOW) met analysts' earnings estimates, and other retailers gained after a Commerce Department report said that sales rose 1.4% in October. 

At the close, the Dow Jones Industrial Average (DJI) was up 136 points to 10,407, the S&P 500 gained 16 points to 1,109, and the Nasdaq (NASD) rose 30 points, ending the day at 2,198. 

The NYSE traded 1.1 billion shares with advancers over decliners by almost 5-to-1. On the Nasdaq, 671 million shares traded with advancers ahead by a margin of more than 3-to-1.

December crude oil gained $2.55, closing at $78.90 a barrel, and the Energy Select Sector SPDR (XLE) gained $1.50 to $58.77. 

Gold for December delivery rose $22.50 to settle at $1,139.20 an ounce, rising in direct response to a weaker dollar. The PHLX Gold/Silver Index (XAU) rose $5.28, closing at $186.27.

What the Markets Are Saying

Yesterday the doubters were put to the test again as the S&P 500 not only closed at a new high for the year, but shattered the psychological barrier of 1,100. But if we look back just two weeks ago to Nov. 3-4, fear was the by-word as the media hyped the notion that the markets were grossly overpriced. On TV, guest after guest proclaimed that we were headed lower and could even crash again, and the song was that of a funeral dirge.