Stocks Leap as Bernanke Pledges Lower Rates

NEW YORK (Reuters) - U.S. stocks rose broadly on Monday, sending indexes to fresh 13-month closing highs, after Federal Reserve Chairman Ben Bernanke reinforced expectations that interest rates would stay low to spur growth.

Bernanke repeated that the Fed was likely to keep interest rates exceptionally low for "an extended period," a pledge that weighed on the U.S. dollar and drove investors to snap up shares of natural resource companies as prices of global commodities -- from gold to wheat -- shot higher.

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.

The S&P materials <.GSPM> and energy <.GSPE> indexes each climbed more than 2.3 percent. Individual stock standouts included Exxon Mobil Corp , up 2.7 percent to $74.43 amid higher crude oil prices, and Caterpillar Inc up 2.8 percent.

"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 (and) stocks because the expected return should be higher over time."

In the last hour of trading stocks briefly pared gains as Meredith Whitney, a prominent analyst, said in a CNBC television interview the stock market run-up was not supported by fundamentals.

The Dow Jones industrial average <.DJI> gained 136.49 points, or 1.33 percent, to 10,406.96. The Standard & Poor's 500 Index <.SPX> shot up 15.82 points, or 1.45 percent, to 1,109.30 -- its first close above the psychologically important 1,100 level for the first time since October 2008.