September 15, 2009 / 8:44 PM / in 8 years

RPT-US STOCKS-Industrial shares lift market to '09 highs

(Repeats to show it is market closing report)

* Materials firms rise on growing commodity demand

* Retailers Best Buy, Kroger miss estimates

* Dow up 0.6 pct, S&P up 0.3 pct, Nasdaq up 0.5 pct

* For up-to-the-minute market news, click STXNEWS/US (Updates to close)

By Rodrigo Campos

NEW YORK, Sept 15 (Reuters) - U.S. stocks rose on Tuesday to 2009 highs after stronger manufacturing and retail sales data boosted commodity prices and shares of materials companies.

Tuesday’s gains lifted the S&P 500 above 1,050 for the first time since early October.

The improvement in retail sales in August reassured investors about a rebound in U.S. economic demand. A rise in the government’s Producer Price Index signaled increased consumption of raw materials. For details see [ID:nN15548319].

Metals prices rose, sending shares of aluminum company Alcoa AA.N up 8 percent, while steelmakers AK Steel AKS.N rose 5.7 percent and US Steel X.N gained 4.8 percent.

The Reuters-Jefferies CRB index of commodity prices .CRB jumped 2.2 percent for its biggest gain in more than a month, while the S&P materials sector .GSPM added 2.4 percent.

The rise in producer prices and a report showing stronger New York state manufacturing suggested demand is building for raw materials.

“To make things, you need stuff that comes from the ground, at least at the beginning of a recovery from recession,” said Kim Caughey, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.

Comments by Federal Reserve Chairman Ben Bernanke that the recession was probably at an end also favored basic materials companies, Caughey said.

Bernanke, speaking on the one-year anniversary of the collapse of Lehman Brothers LEHMQ.PK, said the recession “is very likely over.” For more on the Lehman anniversary see [ID:nLEHMAN].

The Dow Jones industrial average .DJI was up 56.61 points, or 0.59 percent, at 9,683.41. The Standard & Poor’s 500 Index .SPX was up 3.29 points, or 0.31 percent, at 1,052.63. The Nasdaq Composite Index .IXIC was up 10.86 points, or 0.52 percent, at 2,102.64.

A stronger-than-expected rise in retail sales notwithstanding, shares of retailers got hit by disappointing results from Best Buy Co Inc BBY.N and Kroger Co KR.N, both of which reported quarterly profits below expectations.

Shares of electronics store Best Buy fell 5.2 percent to $38.32 while grocer Kroger slid 7.5 percent to $20.46. The S&P Retail index .RLX was down 0.1 percent.

Shares of General Electric GE.N jumped 4.2 percent to $16, helped by an upwardly revised price target from Bernstein Research. The conglomerate’s sharp rebound of about 170 percent from its 2009 lows could be a harbinger of more gains for the broader stock market in the months ahead, said Richard Ross, global technical strategist at Auerbach Grayson.

The Nasdaq got a boost after analysts’ upgrades of Web auctioneer eBay EBAY.O and Internet company Yahoo YHOO.O. Yahoo shares climbed 5.4 percent to $16.41 while eBay added 1.3 percent to $24.14.

Alcoa rose to $13.99, AK Steel advanced to $23.11 and U.S. Steel rose to $48.98. (Additional reporting by Ellis Mnyandu; Editing by Kenneth Barry)

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