U.S. stocks rose Friday, for their second consecutive weekly advance, as upbeat earnings reports from a number of companies, including Walt Disney and JC Penny, spurred optimism that the economic recovery is gaining momentum.  A dip in the value of dollar, on concerns consumer spending is likely to remain bleak, sent shares of commodity-related companies up. 

On Friday, the 30-stock Dow Jones industrial average rose 73 points, or 0.72%, to 10,270.47. The broad Standard & Poor’s 500-stock index was up 6.24 points, or 0.57%, at 1,093.48. The tech-heavy Nasdaq composite index advanced 18.86 points, or 0.88%, to 2,167.88.  For the week the Standard & Poor’s 500 Index jumped 2.3% to 1,093.48.  The Dow average rose 247.05 points, or 2.5%, to 10,270.47, following its 3.2% advance the prior week.

The spike in commodities came after the greenback fell Friday on news that the trade deficit widened more than expected in September.  Commodities, which are priced in US dollar, benefit from a decline in the currency.

Nevertheless, the greenback’s weakened status remains a foreign policy issue of contention, and is likely to weigh on President Obama’s tone in China.  Meanwhile, brushing aside concerns of potential asset bubbles in China, the Chairman of the China Banking Regulatory Commission, instead, cautioned the weak dollar “is boosting speculative investment in stock and property markets and will pose new, real and insurmountable risks to the global recovery and particularly to the recovery in emerging markets.”

Treasury Secretary Geithner last week repeated the Administration’s commitment towards a strong dollar; nevertheless, the impact of a weak dollar on improving American products’ competitive positioning overseas markets is widely expected to help the sustainability of a fragile recovery in the US.

On Friday, the Walt Disney Co. (NYSE:DIS) said quarterly profit rose 18%, helped by higher revenue at its cable, broadcast and movie studio divisions.  Abercrombie (NYSE:ANF) reported better-than-estimated results, while J.C. Penney (NYSE:JCP) raised its earnings and revenue outlook, offsetting a lower-than-expected consumer sentiment post from the University of Michigan.

Among retailers reporting during the week are: Lowe’s (NYSE:LOW) and Pacific Sunwear of California (NASDAQ:PSUN) today; Home Depot (NYSE:HD), Target (NYSE:TGT) and TJ Maxx (NYSE:TJX) on Tuesday; BJ’s Wholesale (NYSE:BJ) and the Limited (NYSE:LTD) on Wednesday; Sears Holding (NYSE:SHLD), Gap (NYSE:GPS) on Thursday.

A busy Fed calendar includes today’s comments from Bernanke; on Tuesday from Lacker, and Pianalto; on Thursday from Plosser, Fisher, Ghosn and Rattner; and on Friday from Plosser. Treasury Secretary Geithner speaks on Tuesday and Thursday.

Zacks Investment Research