US Market Commentary (After Market Close): Dollar's Drop Brings Back Buyers

A drop by the dollar brought buyers in from the sidelines after stocks had fallen for three straight sessions. Early support helped the S&P 500 come within just a couple of points of a new 2009 high, but resistance at current highs left stocks to gradually pare gains for the remainder of the session.

The Dollar Index erased its gains from the previous two sessions with a 0.6% fall. Indian Prime Minister Singh offered support for the greenback, but comments by Chicago Fed President Evans and St. Louis Fed President Bullard stirred selling pressure against the currency. Evans made it known that he thinks near-zero interest rates will remain well into 2010, while Bullard wants to keep the Fed's Mortgage-Backed Securities program active beyond the first quarter of 2010.

There weren't many market-moving headlines for participants to digest this session, though the latest home sales figures proved pleasing. Existing home sales for October made a sharp 10.1% month-over-month spike, which lifted sales to an annualized rate of 6.10 million units. The consensus had called for a 2.3% monthly increase to an annual rate of 5.70 million units. The stronger-than-expected increase in sales took supply down 7.0 months, the lowest since February 2007.

All 10 major sectors were able to put together solid gains as a result of broad-based support. Telecom settled with the best gains; it advanced 2.6% after AT&T (T 26.78, +0.76) received positive coverage by Barron's.

The energy sector had been a leader in the early going. It had benefited from broader market support and a sharp rise in oil prices, which were also bolstered by the dollar's downturn. However, energy surrendered some of its advance to finish with a 1.6% gain as oil prices pulled back to settle with a fractional gain at $77.52 per barrel.

Gold prices maintained steady strength, though. The precious metal ascended to a new all-time high at $1174.00 per ounce and closed with a 1.6% gain at $1164.80 per ounce. That sent gold stocks up 2.1% and the SPDR Gold Trust (GLD 114.29, +1.35) up solidly.

Treasuries were able to resist an early selling effort and finish fractionally higher. That put the yield on the benchmark 10-year at 3.35%, while the yield on the 2-year stands at 0.72%. Treasuries came into closer focus with the results of a $44 billion auction of 2-year Treasuries. The auction drew a yield of 0.80% and a bid-to-cover ratio of 3.16, which is better than recent averages.

Overall trading volume on the NYSE was well below the 50-day moving average of 1.28 billion shares. The light action is expected to continue with the Thanksgiving holiday coming up on Thursday.