Stocks Hold Gains on Improved Retail Data

Stocks on Monday rose sharply after strong October retail sales data.

The Dow Jones Industrial Average closed up 137 points at 10407. The Nasdaq rose 30 to 2198 and the S&P 500 climbed 16 to 1109.

The U.S. economy will continue to grow in 2010 and this expected strength will help ensure the dollar stays firm, Federal Reserve Chairman Ben Bernanke said Monday.

In a rare move, the Fed chief made several remarks on the U.S. dollar, which has fallen in value recently as global economic activity has picked up and investors no longer seek the safety of dollar assets.

Bernanke said jobs are likely to remain scarce and inflation low for some time, but also said next year will be better. 

"I expect moderate economic growth to continue next year. Final demand shows signs of strengthening, supported by the broad improvement in financial conditions," Bernanke said in a speech to the Economic Club of New York. 

He said the central bank will keep a close eye on the dollar's slide but reiterated that the key federal funds target rate is expected to remain at record lows for some time due to a still-fragile economic recovery.

"Our commitment to our dual objectives [of maximum employment and price stability], together with the underlying strengths of the U.S. economy, will help ensure that the dollar is strong and a source of global financial stability," and that the Fed is "attentive to the implications of changes in the value of the dollar."

The dollar rose from session lows right after Mr. Bernanke's remarks, but remained broadly weaker against other major currencies. The euro rose against the dollar Monday to just below the key $1.50 level.

The Commerce Department provided a mixed view on retail sales before the open. Its October retail sales report showed U.S. retail sales jumped higher than expected in last month on rebounding demand for cars, a sign the economy kept recovering despite climbing unemployment. Retail sales increased 1.4% for October, much better than the 0.9% increase projected by Wall Street for the first month of the fourth quarter. September sales, however, were revised down, to a 2.3% decrease from a previously estimated 1.5% tumble.

Helping stocks initially was a report that Japan's economy grew at a stronger-than-forecast clip during the third quarter. 

Crude oil futures traded on the Nymex were up; as of 4:06 p.m., front-month futures contracts traded on the Nymex were up 2.58 cents to $78.93.

Dow Jones Newswires contributed to this report.