Stocks, bonds rally after Summers exits Fed race

Joshua Freed, AP Business Writer

Wall Street was happy to see Larry Summers go.

Stocks rose on Monday after Summers, who had been the leading candidate to replace Federal Reserve chairman Ben Bernanke, withdrew his name from consideration.

Summers was viewed as being more likely to rein in the government's massive stimulus program. The stimulus has helped companies by keeping interest rates low. The president is expected to nominate Ben Bernanke's successor as early as this month. The new front-runner is Janet Yellen, the Fed's vice chair.

Stocks were also helped by news that U.S. factory output rose 0.7 percent in August, the most in eight months.

The Dow Jones industrial average was up 130 points, or 0.8 percent, to 15,508 as of 10:11 a.m. Eastern. The Standard & Poor's 500 index rose 12 points, or 0.7 percent, to 1,700. The Nasdaq composite rose 14 points, or 0.4 percent, to 3,736.

Bond prices rose, pushing yields lower. The yield on the 10-year Treasury note fell to 2.79 percent from 2.88 percent late Friday. The dollar fell against the yen and the euro.

Companies making big moves included:

— Homebuilders rose as investors were encouraged by a decline in long-term interest rates. The biggest gainer in percentage terms was Lennar, up $1.50, or 4.4 percent, to $35.98.

— Boise rose $2.63, or 26 percent, to $12.59 after news that Packaging Corp. of America is buying it for $1.27 billion. Packaging Corp. rose $3.06, or almost 6 percent, to $57.61.

— Apple continued to slide after investors were disappointed with the company's latest iPhone models. Apple lost $9.22, or 2 percent, to $455.70.

Summers' withdrawal helped stocks overseas, too.

In Europe, the FTSE 100 index of leading British shares was up 0.5 percent. Germany's DAX rose 1.1 percent, and the CAC-40 in France was 0.7 percent higher.

Hong Kong's Hang Seng rose 1.5 percent, and South Korea's Kospi advanced 1 percent. Markets in Japan were closed for a holiday.

Oil traders were monitoring Syria developments. The recent diplomatic drive, which has seen the prospect decrease of a U.S.-led attack on Syria dissipate, has pushed oil prices back down. The benchmark New York rate was down $1 at $107.21 a barrel.

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September 16, 2013