The stock market is picking up where it left off before its scare over debt problems in Dubai.
Major stock indicators rose more than 1 percent Tuesday, including the Dow Jones industrial average, which added 126 points and traded above 10,500 for the first time since October of last year.
A weaker dollar again boosted stocks, a pattern that has played out for months. The cheaper U.S. currency drove up commodities prices and lifted the shares of energy and materials companies that produce them.
Analysts said a mostly upbeat array of economic reports and easing worries about the fallout from debt struggles in Dubai gave investors who jumped out of the market last week reason to return.
The market's two-day advance leaves the Dow just above where it was before stocks tumbled Friday on worries that an investment fund in Dubai wouldn't be able to pay its debts. Investors worried that could trigger another financial spiral like the one that followed the collapse of Lehman Brothers last year.
Economic reports were mixed, but still pointed to a strengthening trend. The Institute for Supply Management, a trade group, said overall manufacturing activity grew at a slower pace in November but that new orders rose. That signals activity could pick up in the coming months. The ISM's measure of employment grew for the second straight month after sliding for more than a year.
The snapshot of U.S. factories followed a report from a Chinese industry group that said manufacturing activity grew in November for the ninth consecutive month.
Meanwhile, the National Association of Realtors said its reading on pending home sales rose in October to the strongest level since March 2006. Economists had expected pending sales to fall.
The Commerce Department said construction spending edged higher in October, the first increase in six months.
Bob Froehlich, senior managing director at Hartford Financial Services, said the day's news addressed some of investors' biggest worries: employment, housing and China's economy.
"What we're seeing is that we've got two of those three fixed," he said. "There are signs everywhere you look that the worst is behind us."
Froehlich expects that the nation's unemployment rate, already above 10 percent, will worsen before it begins to improve. Traders are looking to the Labor Department's November employment report, which is due Friday.
The Dow rose 126.74, or 1.2 percent, to 10,471.58, its highest close since October last year. It rose as high as 10,501.28 during trading, the first time it's topped the psychological barrier of 10,500 in 14 months.
The broader Standard & Poor's 500 index gained 13.23, or 1.2 percent, to 1,108.86, while the Nasdaq composite index rose 31.21, or 1.5 percent, to 2,175.81.
The gains built on a powerful November for the market. The S&P 500 index rose 5.7 percent last month, its biggest increase since July. The index is up 63.9 percent from a 12-year low of 676.53 in March.
Bond prices fell, pushing yields higher. The yield on the benchmark 10-year Treasury note rose to 3.29 percent from 3.20 percent late Monday.
As it had last month, a drop in the dollar helped stocks. The ICE Futures U.S. dollar index, which measures the greenback against a basket of foreign currencies, fell 0.5 percent.
Rick Bensignor, chief market strategist at Execution LLC, said the drop in the dollar and a move into riskier assets like stocks is a sign that investors who shifted into defensive positions are no longer worried about a spread of debt problems beyond the Middle East.
"The market has essentially shaken it off," he said. "The whole move is as if nothing happened last week."
Crude oil rose $1.09 to settle at $78.37 per barrel on the New York Mercantile Exchange. Gold topped $1,200 for the first time to settle at $1,200.20 an ounce, a gain of 1.5 percent. Silver and copper prices also touched fresh highs.
Industrial names rose as commodities advanced. Aluminum producer Alcoa Inc. rose 28 cents, or 2.2 percent, to $12.80. Freeport-McMoRan Copper & Gold Inc. rose $1.11, or 1.3 percent, to $83.91.
Energy stocks also gained. Anadarko Petroleum Corp. rose $2.03, or 3.4 percent, to $61.56, while Hess Corp. rose $1.84, or 3.2 percent, to $59.80.
Home builders climbed on the day's economic reports. Beazer Homes USA Inc. advanced 16 cents, or 3.7 percent, to $4.46. Pulte Homes Inc. rose 17 cents, or 1.9 percent, to $9.31.
Richard Ross, global technical strategist at Auerbach Grayson in New York, said investors don't appear willing to give up on the market's surge even if they have concerns it might be overdone.
"It speaks to that sort of bullish undercurrent," he said. "Whether it's misplaced optimism, that's another question."
Four stocks rose for every one that fell on the New York Stock Exchange, where consolidated volume came to 4.4 billion shares compared with 4.3 billion Monday.
The Russell 2000 index of smaller companies rose 9.47, or 1.6 percent, to 589.20.
Overseas markets jumped as fears eased about Dubai's credit problems. The emirate's government investment company said it was looking at restructuring part of its $60 billion in debt.
Britain's FTSE 100 rose 2.3 percent, Germany's DAX index advanced 2.7 percent, and France's CAC-40 rose 2.6 percent. Japan's Nikkei stock average added 2.4 percent.