Please explain why falling dollar causes stock market rally (newbie)?

Can anyone explain in east terms (newbie) why the weak dollar spurred a rise on wall street recently? I want to understand the relationship btw the dollar and the markets.

thank you
aqua

This is not a reliable effect. Here is a link to an article which describes an example real time effects caused by oil prices, gold prices, commodity prices and stock values. I would advise you to read more of these to get a broader picture of what is happening:

http://uk.reuters.com/article/idUKSP42558220090423

In this case is probably due to the improved export of goods.

Lubo.

Some of it is the balancing of currency after the crash. People are liquidating cash reserves and buying back equities, meaning more supply of currency and less supply of stock.

Some of it is the foreign investment effect. A company that has a growing investment overseas wants to see a falling dollar because it lets them post higher returns at home (the US). I don't believe that this effect is stable, or even good, but there it is. The result is a lot of pressure for a weak dollar policy. The excuse is improved exports, but while exports have improved a little there is still relatively no growth in the domestic manufacturing sector.

As a lot of companies have bought into foreign investment schemes, traders know that a falling dollar will make profits look better at home, so they tend trade that way. Along the same lines, mechanical systems that trade correlations now trade billions of dollars on this effect, creating a self-fulfilling prophecy.

Coupled with our current situation: High national debts, very low interest rate, and a falling dollar is all the rage. At some point we'll start seeing job growth, and at that point the interest rate will rise again to counter inflation. When that happens the dollar will see a run of strength that might break some of these trading patterns. Until then...