Dow up 107 as rally continues

Updated: 8:38 p.m ET

One of the biggest questions after Wednesday's big rally was if it had enough strength to continue.

It had plenty of strength today, thanks to a stronger-than-expect​ed report on pending home sales and decent reports on retailers' November sales. The report was another bit of evidence that the economic recovery is gaining strength. Another signal of strength: Crude oil hit a 2-year high.

Today's rally also built on gains in Europe as the European Central Bank extended an emergency loan program. Stocks rose sharply in Britain, Germany and Spain. The dollar fell, and gold came very close to reaching $1,400 an ounce.

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The Dow Jones industrials ($INDU) closed up 107 points, or 1%, to 11,362. The Standard & Poor's 500 Index ($INX) jumped 15 points, or 1.3%, to 1,222, and the Nasdaq Composite Index ($COMPX) added 30 points, or 1.2%, to 2,579.

The Dow's two-day gain of about 356 points was its best two-day performance since a 382-point gain over Aug. 31 and Sept. 1. The streak looks like it will be tested on Friday. Futures trading suggests stocks will open slightly lower.

The market's gain also pushed commodity prices higher, and bond yields rose as stocks pulled money away from bonds.

Gold for February delivery settled up $1 to $1,389.30 an ounce, after rising to as much as $1,399.70.

Crude oil settled at $88 a barrel, up $1.25 from Wednesday and its highest close since Oct. 8, 2008. Crude is up nearly 10% since the end of September and nearly 11% on the year.

The 10-year Treasury ended the day at 3%, its first close at 3% or higher since July.

The dollar was lower against the euro, the Japanese yen and the Canadian dollar.

The market was led by financial stocks after Goldman Sachs raised its rating on them to "overweight" and predicted a 20% rally in the S&P 500 by the end of next year as the economy improves.

JPMorgan Chase (JPM), Citigroup (C) and Bank of America (BAC) were listed among Goldman's "top ideas," Bloomberg News said. JPMorgan was up 3% to $39.31. Bank of America added 3.5% to $11.68, and Citigroup rose 2.8% to $4.42. Wells Fargo (WFC) added 4.5% to $28.78.

Also stronger were homebuilding, steel and commodity stocks.

Home Depot (HD)  was the Dow leader, up 5.5% to $33.36, followed by Bank of America. Freeport-McMoRan Copper & Gold (FCX) added 2% to $107.64, thanks to higher gold and copper prices.

And remember Krispy Kreme (KKD), once one of the hottest stocks around? Shares were up 20.8% to $7.44 today -- after hitting a 52-week high of $7.47. The company reported an 8% revenue gain to $90.2 million. Analysts had expected $88.6 million. Earnings were $2.4 million, or 3 cents a share; analysts had expected a loss of a penny a share.

Energy prices -- New York close
			Thur.			Wed.			Month chg.			YTD chg.
Crude oil			$88.00			$86.75			4.62%			10.89%
(per barrel)
Heating oil			$2.4546			$2.4056			5.94%			16.02%
(per gallon)
Natural gas			$4.3430			$4.2690			3.90%			-22.06%
(per mil. BTU)
Unleaded gasoline			$2.3553			$2.3004			3.98%			14.73%
(per gallon)
Retail gasoline			$2.8790			$2.8640			0.88%			9.09%
(per gallon; AAA)

Pending home sales surprise
Pending sales of U.S. existing houses unexpectedly jumped by a record 10% in October, indicating the industry at the center of the last recession is stabilizing as the job market improves.

The increase in the number of Americans signing contracts to buy previously owned homes followed a 1.8% drop in September, the National Association of Realtors said today.

Combined with figures showing chain-store sales topped estimates last month, the reports added to evidence the world’s largest economy is strengthening.

Cheaper borrowing costs, lower prices and more jobs may entice homebuyers in coming months, helping the real-estate market regain its footing after the end of a tax credit caused demand to slump.

The report pushed homebuilding shares higher. Pultegroup (PHM) was up 3.2% to $6.75. Ryland (RYL) added 5.1% to $15.81. The Philadelphia Housing Sector Index ($HGX) was up 2.7% to 102.

Retailers see sales gains in November
In another bit of evidence that the recovery is looking stronger, retailers generally reported sales gains in November that beat Street estimates.

The gains didn't necessarily boost stock prices, except in one spectacular case. Abercrombie & Fitch (ANF) sales were up 22%, compared with consensus estimate of a 6.4% gain. The stock was up 11.1% to $56.02, tops among S&P 500 stocks.

Companies also beating Street estimates included Limited Brands (LTD), a 10% sales gain; Target (TGT), up 5.5%; Macy's (M), up 6.1%; and Nordstrom (JWN), up 5.1%.

Surprisingly, Macy's shares were off 1% to $25.54. Nordstrom was off 3% to $42.14.

Short hits from the markets -- New York close
			Tues.			Mon.			Month chg.			YTD chg.
Treasury yields
13-week Treasury bill			0.150%			0.160%			-6.25%			200.00%
5-year Treasury note			1.675%			1.622%			14.41%			-37.64%
10-year Treasury note			3.000%			2.964%			7.26%			-21.94%
30-year Treasury bond			4.266%			4.237%			4.00%			-8.08%
Currencies
U.S. Dollar Index			80.336			80.762			-1.15%			2.71%
British pound			$1.5615			$1.5618			0.30%			-3.47%
(in U.S. $)
U.S. $ in pounds			£0.640			£0.640			-0.30%			3.59%
Euro in dollars			$1.323			$1.313			1.83%			-7.70%
(in U.S. $)
U.S. $ in euros			€ 0.756			€ 0.762			-1.79%			8.34%
U.S. $ in yen			84.034			84.150			0.25%			-9.64%
U.S. $ in Chinese			6.688			6.659			-0.10%			-2.03%
yuan
Canada dollar			$1.00			$0.98			2.17%			4.80%
(in U.S. $)
U.S. dollar			$1.00			$1.02			-2.13%			-4.59%
(in Canadian $)
Commodities
Gold			$1,389.30			$1,388.30			0.31%			26.74%
(per troy ounce)
Copper			$3.98			$3.95			4.08%			18.90%
(per pound)
Silver			$28.57			$28.41			1.37%			69.62%
(per troy ounce)
Wheat			$7.07			$6.98			8.61%			30.47%
(per bushel)
Corn			$5.41			$5.52			2.03%			30.46%
(per bushel)
Crude oil			$88.00			$86.75			4.62%			10.89%
(per barrel)