S&P 500 hit a six-week high after news that former Treasury Secretary
Lawrence Summers is no longer a candidate to be the next Federal Reserve
chairman. His confirmation was seen to be a contentious process that would add
uncertainty to the market.
Equity investors welcomed this
news and showed optimism that Janet
Yellen, a top contender, would succeed chairman Ben Bernanke. She is widely expected to pursue a similar
policy of stimulating the economy to bring the unemployment rate down. Yellen
is currently the Fed's vice chair.
Bond investors were optimistic, too.
The 10-year Treasury yield fell to 2.87% as investors rushed to buy long-term
bonds. The dollar sold off against major currencies, including the euro and the
With Summers out of the running
for the Fed chair, it also has added to expectations that the Fed will continue
its current path of quantitative easing. Summers was seen as more likely to
wind down stimulus than the now front-runner, Yellen.
decision to remove his candidacy on Sunday came just days before the U.S.
central bank will meet to decide when, and by how much, to scale back its monthly
bond-purchase program, which is currently buying $85 billion in bonds each
Markets did retreat some after President Obama warned
Republicans in Congress that he would not negotiate an extension to the debt
ceiling as a part of the budget
Stocks continued to rally despite the a
temporary halt to options trading Monday afternoon at exchanges run by CBOE Holdings (CBOE), Nasdaq OMX (NDAQ), BATS Global Markets and Miami International Holdings due
to issues at the Options Price Reporting Authority (OPRA), which provides
trading data and price quotes. The temporary halt did not disrupt broader
market trading, but it is another cause for concern for the exchanges.