Market Commentary (After Market Close): Dollar's Drop Helps Dow Hit New 2009 High

Market participants responded to a sharp drop by the U.S. dollar with a broad-based buying effort that helped stocks make heady gains and finish at session highs. In fact, the Dow Jones Industrial Average logged its best closing level in 52 weeks.

News that members of the G-20 and Treasury Secretary Geithner maintain the view that economic stimulus should not yet be withdrawn led to heavy selling against the U.S. dollar and drove the Dollar Index back to 2009 lows. It spent the entire session trading with a loss of roughly 1.0%.

Weakness in the greenback was greeted with a concerted buying effort that gave stocks broad-based gains. Within the S&P 500, 95% of its components logged a gain and gave the broad market index its sixth straight gain. Meanwhile, Kraft (KFT 26.53, -0.25) was the only listing in the 30-member Dow that failed to put together a gain. Its shares were sent lower after the food giant failed to take over Cadbury Schweppes (CBY 50.71, +0.21) with a cash and stock offer that valued the confectioner at some 9.8 billion British pounds.

Strength among diversified banks (+4.3%) and life and health insurers (+4.7%) helped the financial sector finish the session 3.6% higher and overtake materials as the session's best performing sector.

Materials stocks had sported the best gains for most of the session. The sector was helped along by broader market support and interest in basic materials and commodities amid the dollar's decline. The sector finished with a 3.2% gain as buyers showed favor for steel stocks (4.5%) and diversified metals and mining stocks (4.6%).

As for individual commodities, gold prices hit a new all time high of $1111.70 per ounce before pulling back a bit to settle pit trade with a 0.5% gain at $1101.40 per ounce. Meanwhile, buying in crude futures drove oil prices above $80 per barrel, but some momentum was lost so that contracts closed with oil priced at $79.43 per barrel, up 2.6%.

Amid a lack of major earnings announcements and a vacant economic calendar, recaps of the G-20's weekend meeting made up most of the headlines this session. However, health care reform has come back into sharper focus since the House of Representatives passed new health care legislation during the weekend. That turns the focus of industry watchers to the Senate.

Though market participants showed an increased interest in risk by chasing stocks, Treasuries had a reasonably solid session. As such, the benchmark 10-year Note climbed some six ticks. Its gain was solidified after results from a $40 billion auction of 3-year Notes produced a yield of 1.40% and a bid-to-cover ratio of 3.3.