* Fed chairman downbeat on economy, says watching dollar
* Commodity stocks lead broad-based advance as dollar sags
* Dow up 1.5 pct; S&P 500 up 1.8 pct; Nasdaq up 1.7 pct
* For up-to-the-minute market news, click []
(Updates to midafternoon, changes byline)
By Ellis Mnyandu
NEW YORK, Nov 16 (Reuters) - U.S. stocks rallied broadly to
fresh 13-month highs on Monday after Federal Reserve Chairman
Ben Bernanke reinforced expectations that interest rates would
stay low to spur growth.
In a speech before the Economic Club of New York, Bernanke
said the recovery would not be as robust as previously hoped,
and rising unemployment and tight bank lending were significant
headwinds.
He repeated that the Fed was likely to keep interest rates
exceptionally low for "an extended period," a pledge that drove
the U.S. dollar lower and drove investors to snap up shares of
natural resource companies as prices of global commodities --
from gold to wheat -- shot higher.
The S&P materials <.GSPM> and energy <.GSPE> indexes each
climbed nearly 3 percent. Individual stock standouts included
Exxon Mobil Corp <XOM.N>, up 2.7 percent to $74.43, amid higher
crude oil prices.
"The overriding message from Bernanke is that interest
rates will stay low and remain low for the near to medium term.
It seems that the market likes that," said Dennis Cajigas,
senior market strategist at Lind-Waldock, a retail brokerage
firm, in Chicago.
"Investors essentially are borrowing against low rates in
the dollar and putting that money in areas that they feel will
react well against inflation, such as crude oil, energy, gold,
commodities, stocks because the expected return should be
higher over time."
The Dow Jones industrial average <> climbed 158.56
points, or 1.54 percent, to 10,429.03. The Standard & Poor's
500 Index <.SPX> leapt 19.82 points, or 1.81 percent, to
1,113.30. The Nasdaq Composite Index <> gained 37.00
points, or 1.71 percent, to 2,204.88.
The benchmark S&P 500 is now up 64.5 percent since the
12-year closing low of March 9 and on Monday it was on track to
close above the psychologically important 1,100 level for the
first time since October 2008.
Shares of Caterpillar Inc <CAT.N>, whose fortunes are
closely tied to the commodities industries including mining,
shot up 3.4 percent to $60.80, making the heavy equipment maker
the biggest boost for the Dow.
Shares of AK Steel Holding Corp <AKS.N> jumped 8.22 percent
to $18.81, while gold miner Newmont Mining <NEM.N> added 3.4
percent to $52.73. The gold bugs index <.HUI> jumped 4 percent
after COMEX December gold <GCZ9> hit a record above $1,140 an
ounce.
Even though Bernanke made a rare statement on foreign
exchange markets, saying the Fed was watching the U.S. dollar
closely, the greenback found very little lasting reprieve.
The United States and China failed to reach an agreement
over currencies at a summit of the Asia Pacific Economic
Cooperation forum in Singapore.
Bernanke, commenting on the dollar's decline, said the Fed
is attentive to changes in the U.S. currency and the Fed's
mandate will help ensure the greenback remains strong.
[].
"If you take away stimulus, this economy falls apart. He
knows it. He's boxed in here, he can't raise rates. It's
impossible," said Joe Saluzzi, co-manager of trading at Themis
Trading in Chatham, New Jersey. "So what do we do? We continue
to buy equities because that's what the trade is."
(Additional reporting by Rodrigo Campos; Editing by Kenneth
Barry)
