Market Continues Uptrend Even As Analyst Waves Caution Flag

November 16, 2009 5:53 PM EST

Following the reaffirmation that the interest rates would stay low to spur grow by Federal Reserve Ben Bernanke, the stock market rallied to 13-month highs. A rise in retail sales in October of 1.4 percent also helped to fuel the rally.

Bernanke iterated that the recovery would not be as robust as hoped, as the high unemployment rate and tight banking lending will continue to be obstacles on the road to turnaround.

"My own view is that the recent pickup reflects more than purely temporary factors and that continued growth next year is likely," says Bernanke, according to a transcript. "However, some important headwinds in particular, constrained bank lending and a weak job market likely will prevent the expansion from being as robust as we would hope."

The Dow Jones Industrial Average rose 1.33 percent to $10,406.96, while the Standard & Poor’s 500 jumped 1.45 percent to $1,109.30. The S7P is now up 64.5 percent since the 12-year closing low of March 9, closing above the psychologically important $1,110 for the first time in 13 months.

Investors are continuing to favor commodities such as gold, as the precious metal closed at another record high at $1,138.60, up $22.50 on Monday. The surges in gold prices are attributable to the continuing nervousness in currencies such as the U.S. dollar. The dollar fell to $74.89 at the close on Monday.

"We are attentive to the implications of changes in the value of the dollar," said Bernanke who stated that the situation with the dollar will be continually monitored by the Fed.

Also driving up gold price is the actions by foreign government, as they stockpile the precious metal. Countries like China and India are hoarding gold, however still lagging behind the U.S. which has 261.5 million ounces in reserves.

One individual stock standout was Exxon Mobil (NYSE: XOM) which finished up 2.7 percent at $74.43 at the close, driven by the 3.34 percent jump in oil prices. Oil closed at $78.90 on Monday, up 3.34 percent.

Meredith Whitney, CEO of the Meredith Whitney Advisory Group, said she has not been this bearish on the market in a year during an interview with CNBC on Monday. Whitney sees no reason behind the recent rally in stocks, and expects a double-dip recession although the second part will not be as severe.

Following the comments by Whitney the market slipped before closing well into the positive on Monday.

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• Ben S. Bernanke
• Standard & Poor's
• Meredith Whitney

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