Wall Street back in its groove as stocks and commodities surge, dollar sinks

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The formula is working again: The seemingly incongruous combination of better-than-expected economic data and a falling dollar is driving the stock market to new one-year highs today.

The Standard & Poor’s 500 index has surged decisively through the 1,100 mark, which is where it had stalled in late October and again last week. If the S&P can hold its gains for the day the chart-watchers’ fear of a ‘double top’ will be out the window.

The S&P was up 19.46 points, or 1.8%, to 1,112.94 at about 11:15 a.m. PST, amid a broad market rally. The Dow industrials were up 154.33 points, or 1.5%, to 10,424.

The government’s report on October retail sales was stronger than expected, and that helped fuel a rally at the opening bell.

But the best-performing market sectors are energy and raw materials -- a byproduct, once again, of a weakening dollar. The greenback is retesting last week’s lows against major currencies as global investors and speculators resume piling into higher-risk assets, using borrowed dollars for financing. That’s the so-called carry trade.

The DXY index of the dollar’s value against six other major currencies was at 74.81 at about 11:15 a.m. PST, nearing last week’s 15-month low of 74.77.

As usual, gold is flying as the dollar sinks. The yellow metal is up $23.70 to a record $1,140 an ounce.

The buck briefly spiked higher today after Federal Reserve Chairman Ben S. Bernanke said in a speech in New York that the Fed was ‘attentive to implications of changes in the value of the dollar’ -- an unusual comment, because the central bank typically pretends that it doesn’t worry about the U.S. currency, deferring that concern to the Treasury.

But currency traders saw no hint in Bernanke’s comment that the government will do anything more than talk about the dollar as it slides.

‘In the absence of any notable shift on the policy front we doubt that ‘official’ jawboning can do much to reverse the current weak dollar trend,’ Vassili Serebriakov, a currency strategist at Wells Fargo & Co., said in an e-mail.

-- Tom Petruno