cloudy
Wednesday May 27th, 2015 6:02AM

Stocks rally after Summers exits Fed race

By The Associated Press
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, a former Treasury secretary, was viewed as being more likely to rein in the government's massive stimulus program, which has kept interest rates low and boosted corporate profits.

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 rose 118.72 points, or 0.8 percent, to close at 15,494.78. The Standard & Poor's 500 index rose 9.61 points, or 0.6 percent, to 1,697.60. The Nasdaq composite fell 4.34 points, a fraction of a percent, to 3,717.85, pulled down by a loss in Apple.

Nine of 10 sectors in the S&P 500 rose, led by industrial stocks. Only technology stocks declined.

At its highest point in late morning trading, the S&P 500 was within five points of its previous record close of 1,709.67, set on Aug. 2.

That worried Brad McMillan, chief investment officer for Commonwealth Financial.

McMillan said there are risks that investors don't seem to be accounting for in the prices they're paying. The Syria situation might not be resolved as easily as some are assuming. Europe's debt crisis isn't over. Investors seem to believe corporate profits will keep growing as fast as they have been, even though cheap debt refinancing has driven much of that growth. And there's another debate upcoming in Washington about the U.S. debt ceiling. "The last time we had a real problem with it, it did result in a significant market correction," McMillan said.

Linda Duessel, market strategist at Federated Investors in Pittsburgh, said it's just as likely that some of those issues will turn out in ways that don't hurt stocks. And even if one of those issues causes stocks to decline, "that could be the correction that any us of who have cash on the sidelines are waiting for," she said.

The Fed has been buying $85 billion per month in bonds, which has had the effect of keeping interest rates low and reduced borrowing expenses for companies.

The Fed has been saying for months that it will slow that stimulus once there's a better outlook for jobs. The question has been how soon, and how much. The consensus with Summers was, sooner, and more. That's why stocks rose once investors found out he won't be the next Fed chief.

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.

The Fed is expected to take its first step toward reducing that stimulus in a two-day policy meeting that ends Wednesday. Many economists think it will trim $10 billion from its monthly bond purchases.

The yield on the 10-year Treasury note declined more than a tenth of a percent earlier in the day, but regained most of that, and finished at 2.87 percent, down from 2.88 percent late Friday. The dollar fell against the yen and the euro.

Among companies making big moves:

- Homebuilders rose as investors were encouraged by a decline in long-term interest rates. The biggest gainer in percentage terms was PulteGroup, up 62 cents, or 3.8 percent, to $17.14.

- Boise rose $2.60, or 26 percent, to $12.56 after news that Packaging Corp. of America is buying it for $1.27 billion. Packaging Corp. rose $5.88, or almost 11 percent, to $60.43.

- Apple continued to slide, down $14.78, or 3.2 percent, to $450.10. Apple has fallen 11 percent since announcing its new iPhone lineup last week. Investors believe the new phones won't bring in as much overseas revenue as they had previously hoped.

Trading in stock options was halted for less than an hour Monday afternoon because of a problem with their price-reporting system.

Summers' withdrawal helped stocks overseas, too. The FTSE 100 index of leading British shares was up 0.6 percent. Germany's DAX rose 1.2 percent, and the CAC-40 in France was 0.9 percent higher.

Oil traders were monitoring Syria developments. The recent diplomatic drive, which has caused the prospect of a U.S.-led attack on Syria to dissipate, has pushed oil prices lower. The benchmark New York price of crude fell $1.62 to $106.59 a barrel.
© Copyright 2015 AccessNorthGa.com
All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.
S&P 500 index has its best year since 1997
The stock market closed out a record year with more all-time highs on Tuesday, giving U.S. indexes their biggest annual gains in almost two decades.
6:56PM ( 1 year ago )
Colorado readies for 'Green Wednesday' pot sales
Police were adding extra patrols around pot shops in eight Colorado towns that plan to allow recreational sales to anyone over 21 on Jan. 1.
1:52PM ( 1 year ago )
Kerry seeks framework for Mideast peace talks
A senior State Department official says Secretary of State John Kerry will try this week to get Israel and the Palestinians to agree on a framework for negotiating a final peace agreement, yet cautions against raising expectations for Kerry's latest round of shuttle diplomacy.
1:35PM ( 1 year ago )
U.S. News
Missing Ga. bank director arrested in Brunswick
A bank director accused of losing millions of investors' dollars before vanishing last year was arrested Tuesday during a traffic stop in a city in south Georgia.
7:00PM ( 1 year ago )
Amtrak to suspend some Crescent service in Jan., Feb.
Amtrak service will shut down in parts of the Southeast for several days in January and February for rail maintenance by Norfolk Southern Railway.
9:00AM ( 1 year ago )
Lung cancer scans urged for some smokers, not all
Certain current or former heavy smokers should start getting yearly scans for lung cancer to cut their risk of death from the nation's top cancer killer, government advisers said Monday - even as they stressed that the tests aren't for everyone.
7:26AM ( 1 year ago )
Business News
Sex offender held in Hall County for failing to register
A 47-year-old man was booked into the Hall County Jail Tuesday, being held without bond for allegedly failing to register as a sex offender, his second such arrest.
6:09PM ( 1 year ago )
Pharmacy robberies may involve same suspect
Oakwood Police Tuesday afternoon released details in a pharmacy robbery they're investigating, similar to one that happened in the Hall County Tuesday morning.
5:46PM ( 1 year ago )
Victim critical following apartment fire
A 41-year-old woman was in critical but stable condition Tuesday after being rescued from an apartment fire in Forsyth County late Monday afternoon.
3:16PM ( 1 year ago )
Local/State News
Van crashes into Lawrenceville daycare
Lawrenceville police are investigating after a vehicle left the roadway and crashed into the side of a daycare center Tuesday afternoon.
10:21PM ( 7 hours ago )
Suwanee City Council approves $11K for Town Center lighting improvements
New lights are on the way to the streetlamps in the Suwanee Town Center following a contract approval Tuesday night by the city council.
7:08PM ( 10 hours ago )
Bat survey, other environmental studies add to price tag for Glades Reservoir project
The price tag for the Glades Reservoir project in north Hall County keeps getting bigger, and the county is still a year away from getting a permit for the project.
5:45PM ( 12 hours ago )
Storms moving through North Georgia, weaken throughout the week
A storm system moving through North Georgia is the same one that caused serious damage in Texas and Oklahoma.
5:18PM ( 12 hours ago )
Faulty fan, smoke blamed in brief evacuation of US Capitol
WASHINGTON (AP) — Police briefly evacuated hundreds of workers and tourists from the U.S. Capitol and its adjacent visitors' center on Tuesday in a problem officials tentatively blamed on a faulty exh...
2:58PM ( 15 hours ago )