Nasdaq and S&P 500 at '09 highs

Stocks stage a rally, with banks and techs among the big gainers. Apple slips. Beige Book says economy continues to stabilize.

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By Alexandra Twin, senior writer

How has Wall Street responded to last year's collapse of Lehman Brothers?
  • Made significant changes
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  • It's gotten worse
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NEW YORK( -- Stocks rallied Wednesday, with the Nasdaq and S&P 500 ending at 11-month highs as investors welcomed a Federal Reserve report that indicated the economy is stabilizing.

The Dow Jones industrial average (INDU) gained 50 points, or 0.5%, ending just short of a 10-month high.

The S&P 500 (SPX) index gained 8 points, or 0.8%, ending the session at an 11-month high.

The Nasdaq composite (COMP) rose 22 points, or 1.1%, ending the session at the highest point since Oct. 1.

Stocks struggled in the first 30 minutes of trading and then made a move higher. Investors initially took a step back after the release of the Fed's "Beige Book" survey of the economy, but then redoubled their efforts late in the session.

"It's the combination of the weak dollar lifting a lot of companies with international operations and a lot of news coming out of all the techs," said Dave Rovelli, managing director of U.S. equity trading at Canaccord Adams.

A variety of heavily-weighted Dow components rose, including Boeing (BA, Fortune 500), 3M (MMM, Fortune 500), Caterpillar (CAT, Fortune 500), Johnson & Johnson (JNJ, Fortune 500), Hewlett-Packard (HPQ, Fortune 500) and United Technologies (UTX, Fortune 500).

Citigroup's annual tech conference, Apple's afternoon media event and mid-quarter updates from Altera (ALTR) and Texas Instruments (TXN, Fortune 500) were among the tech events Rovelli cited.

With the S&P 500 up more than 50% off the March 9 lows, stocks are going to be facing some challenges on the technical side of trading going forward, Rovelli said, as the S&P 500 bats against the 1040 to 1045 level.

Beige Book: The Federal Reserve said reports from its 12 districts showed economic conditions continued to improve in July and August, although consumer spending remained weak. Most of the regions said that there was some improvement in the residential real estate market although home prices continued to slip.

Apple: CEO Steve Jobs delivered the keynote address at the company's media event in the afternoon, making his first appearance at an Apple event in nearly a year. Jobs returned to work this summer after taking a medical leave for the first six months of the year.

Jobs announced a new version of iTunes. Apple also said the company's 8 GB iPod Nano will include a built-in video camera and FM radio.

Earlier Wednesday, Apple (AAPL, Fortune 500) cut prices on its line of iPods by as much as $120.

Shares closed 1% lower.

Currencies and commodities: The greenback held close to yearly lows versus the euro and Australian currency, and two-month lows versus the yen.

The weak dollar has boosted oil, gold and other dollar-traded commodity prices. Those prices have also been on the rise on bets of a global economy recovery.

U.S. light crude oil for October delivery rose 21 cents to settle at $71.31 a barrel on the New York Mercantile Exchange.

COMEX gold for December delivery fell $2.70 to settle at $997.10 an ounce, after topping the key $1,000 level earlier in the session for the second day in a row.

Bonds: Treasury prices ended higher, erasing losses after Treasury saw solid demand for a $20 billion auction of ten-year notes. The yield on the benchmark 10-year note fell to 3.47% from 3.48% late Tuesday. Treasury prices and yields move in opposite directions.

On Thursday, Treasury auctions $12 billion in 30-year bonds.

McDonald's: The fast-food chain said global sales at restaurants open a year or more rose 2.2% in August, the slowest growth in nearly a year. Weakness in Asia and a slowdown in the U.S. countered strength in Europe. Shares of McDonald's (MCD, Fortune 500), a Dow component, slumped 2%.

Other company news: Biotech Vivus (VVUS) reported positive results from two late-stage studies of its experimental weight loss drug, Qnexa. Shares gained 71%.

World markets: Global markets were mixed. In Europe, London's FTSE 100 crossed the 5,000 mark, while France's CAC 40 and the German DAX gained at least 1%. Asian markets ended lower.

Market breadth was positive. On the New York Stock Exchange, winners topped losers seven to three on volume of 1.24 billion shares. On the Nasdaq, advancers beat decliners by over two to one on volume of 2.51 billion shares.

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