New York: A broad US stocks rally sent the Dow industrials to a 13-month high on Monday, after the Group of 20 pledged to keep aid flowing to the world economy, strengthening investors' desire for risk.
The agreement by G20 finance ministers and central bankers over the weekend to keep stimulus in place boosted global stocks on the expectation of prolonged low interest rates.
The US dollar briefly fell to a 15-month low, bolstering commodity prices and materials stocks. Freeport MacMoRan Copper & Gold Inc shares shot up 4.6 per cent to $83.20 and the S&P materials sector index gained 3.2 per cent.
"Central banks around the world are continuing to prop up the economy and support risk taking. There's very little regard for valuation," said Jack Ablin, chief investment officer of Harris Private Bank in Chicago.
"It looks to me like a pure risk rally and it is consistent with the G20 comments."
Shares of chipmakers rose sharply, with the PHLX semiconductor index up 3.2 per cent, its largest increase in a month. On Monday, Wells Fargo raised its 2010 growth projection for chipmakers.
Among chipmaker shares, Applied Materials Inc rose 5.2 per cent to $12.98 on Nasdaq and Micron Technology Inc shot up 6.1 per cent to $7.51 on the New York Stock Exchange.
The Dow Jones industrial average jumped 203.52 points, or 2.03 per cent, to 10,226.94. The Standard & Poor's 500 Index .SPX rose 23.78 points, or 2.22 per cent, to 1,093.08. The Nasdaq Composite Index gained 41.62 points, or 1.97 per cent, to 2,154.06.
Lower interest rates worldwide make investing in risky assets like stocks more attractive, and reduce the cost of corporate financing used for investment.
Financial stocks were also top performers in the session, with shares of American Express Co up 4.9 per cent at $39.05. The KBW bank index .BKX gained 3.6 per cent.
