SEPTEMBER 24, 2010, 6:02 P.M. ET.

DOW Holds a September Rally

Four-Week Win Streak Puts Blue Chips Up 8.4% in Month

By JONATHAN CHENG

U.S. stocks got another shot in the arm on Friday, closing out the week with a surge that put the Dow Jones Industrial Average on track for the best September in 71 years.

Paul Vigna has details about today's big rally in stocks and why he believes animal spirits have returned to the market.
.The Dow leapt 197.84 points, or 1.9%, to 10860.26. The Dow rose 2.4% this week, extending its weekly win streak to four. The benchmark is up 8.4% this month, the best September since a 13.5% rise in 1939. Investors snapped up commodities and the euro, all signs of an increasing tolerance for riskier assets.

Gold set another record and briefly pierced $1,300 an ounce.

The day's advances began in Europe, after a strong German business sentiment survey helped reassure investors that the export giant's economic machine was humming. U.S. economic data a few hours later showed companies spending more, helping paint a picture of increasing corporate aggressiveness at a time when the global economy looks to be on the rise.

"That's what this market needed: solid signals that companies are spending their money, at a time when global demand is intact," said Quincy Krosby, chief market strategist at Prudential Financial. With the dollar weakening against most other currencies, she said, "that's supportive of export-driven companies."

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..Another international boost came from Petroleó Brasileiro, or Petrobras, which raised $70 billion through the sale of more than four billion common and preferred shares in Brazil and the U.S. On Brazil's Bovespa exchange, the preferred shares fell 1.9%. On the New York Stock Exchange, the American depositary receipts fell 1.9% to $34.92.


Markets Hub: Stocks, Gold Rally
3:41

Stocks have sprung back into rally mode, as investors look at revisions to summer data suggesting August's concerns may have been overblown. Also, gold crosses the $1,300 threshold. Donna Kardos Yesalavich, Anna Raff and Paul Vigna discuss.
.The market also received a boost from the Federal Reserve's message earlier in the week that it is prepared to take action if the economy weakens.

"The concept of a double-dip recession has been replaced with slow and steady improvement, and even if we don't get it, we have a Federal Reserve that's ready to step in and support the rally," said Art Hogan, chief market analyst at Jefferies.

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.The prospect of the Fed seeking to boost the economy through more asset purchases has weighed on the U.S. dollar, which weakened sharply against the euro and a broad range of currencies.

Gold for September delivery surpassed $1,300 a troy ounce before setting a fresh closing record of $1,296 an ounce, up $1.70, or 0.1%. It rose $20.40, or 1.6%, on the week, the second straight weekly rise and the seventh in the past nine weeks Silver rose 0.9% on Friday—and 2.85% in the week—to a 30-year high of $21.38 an ounce.

Investors pushed raw materials broadly higher, as investors gained greater confidence that the economy would avoid another recession—a risk that has kept commodities prices muted. The prices for oil and copper, both closely associated with industrial activity, jumped.


Associated Press

Stocks rose despite a drop in August durable-goods orders.
.Crude-oil prices added $1.31, or 1.7% to finish at $76.49 a barrel, while copper prices reached a fresh five-month high, up 2.8% for the week. Agricultural commodities were some of the best performers, with corn up 4.4%, wheat up 3.2% and soybeans up 2.8% on Friday.

Those and other commodities also benefited from the weakening dollar, which essentially makes them cheaper to buy for nondollar holders. The Dow Jones-UBS Commodities Index, which tracks a basket of commodities, rose 1.2%.

Investors sold safer assets such as Treasurys, which pushed the yield on the benchmark 10-year note up to 2.610% as yields and prices move inversely.

Among the big stock-market movers were companies with lots of global exposure, including Caterpillar, up 4.6% and Alcoa, up 3.9%.

The Standard & Poor's 500-stock index rose 2.1%; the Nasdaq Composite Index surged 2.3%. Technology giants Amazon.com and Apple both set records.

If there was a note of caution evident Friday, it was the persistence of low volume, with New York Stock Exchange composite volume coming in at 4.3 billion shares, compared with the year's daily average of a little less than five billion shares.

"If this was a truly meaningful rally, there would be a lot more volume on the tape," said Michael Shea, managing partner at Direct Access Partners. "I don't think everyone's sold on the fact that this is a bona fide rally. When we see more investors sold on it, that's when you're going to see volume pop."

Advancing stocks outnumbered decliners four to one, and all 30 of the Dow's components—and all but 12 of the S&P 500 stocks—rose.

The bullishness extended to the Philadelphia Stock Exchange's Semiconductor Index, which jumped 4%, and the Russell 2000 index of small-cap stocks, which added 3.4%.

"We had to go through a healing process and make numerous attempts at a bottom, and we did in August," said Steven Goldman, market strategist at Weeden & Co. "We've had a pullback for five or six months from our big rally, and now that we've weathered the storm, we can attempt to put on some more gains."

—Liam Pleven and Carolyn Cui contributed to this article.
Write to Donna Kardos Yesalavich at donna.yesalavich@dowjones.com

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