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Blue-chip stocks post best day since November

February 16, 2010 |  3:32 pm

U.S. blue-chip stock indexes on Tuesday posted their biggest gains of the new year, as the market continued to bounce back after a four-week slump.

The Dow Jones industrial average rallied 169.67 points, or 1.7%, to 10,268.81, its largest percentage advance since Nov. 9.

The broader Standard & Poor’s 500 index also had its best day since Nov. 9, rising 1.8% to 1,094.87.

Although trading volume was light as some investors and traders added a fourth day to their three-day holiday, market players who came back to work had more reasons to buy than sell: some solid data on U.S. manufacturing and on housing, and a rebound in the euro as worries about Greece’s debt nightmare receded a bit.

The weakness in the dollar in turn helped boost commodity prices (gold jumped $29.80 to $1,119.30 an ounce, the highest since Jan. 19), and that was good for stocks of energy and raw-materials producers, which led the S&P index higher.

Wall Street had slumped for four straight weeks through Feb. 5, the longest losing streak since mid-2009, and the market seemed poised to suffer its first 10% drop in major indexes since the rally began last March. The New York Stock Exchange composite index fell 9.9% from Jan. 11 to Feb. 8, and some market sectors suffered bigger hits (see this list of the declines in popular exchange-traded funds as of Feb. 8).

But the bears couldn’t keep the selling momentum going. The NYSE index now has rallied 4.5% since Feb. 8. And the riskier corners of the market are leading the rebound. The Russell 2,000 small-stock index is up 5.8% since Feb. 8; the Ishares Emerging Markets index stock fund is up 7% since then.

-- Tom Petruno