Markets were happy to get rid of a little uncertainty.
First, the scoreboard:
- Dow: 15,494.7, +1118.7, +0.7%
- S&P 500: 1,697.6, +9.6, +0.5%
- NASDAQ: 3,717.8, -4.3, -0.1%
And now the top stories:
- On Sunday afternoon, controversial former Treasury Larry Summers withdrew his name from the race to be the next Chairman of the Federal Reserve. “I have reluctantly concluded that any possible confirmation process for me would be acrimonious and would not serve the interest of the Federal Reserve, the Administration or, ultimately, the interests of the nation’s ongoing economic recovery,” Summers wrote in a letter to President Obama.
- “[I]t’s really, really hard to see how Obama can justify not picking Janet Yellen at this point,” wrote economist Paul Krugman. “Nobody else is as qualified; any other choice would look like spite.”
- “Could Obama’s tone-deafness on the Fed steer him toward a choice other than Janet Yellen?” said Potomac Research Group’s Greg Valliere. “He has virtually no option — she’s now the clear favorite — and the markets will get a more predictable policymaker than Summers would have been.”
- “Although Summers’s withdrawal from the race for the Federal Reserve Chair increases the odds that Vice Chair Yellen will get the nod from the President (which has been the UBS economics call from the start), it is by no means a guarantee,” said UBS’s Drew Matus. “His withdraw also increases the odds of a compromise candidate such as former Fed Vice Chair Ferguson (a money manager, PhD Economist and a JD who may be better able to manage the new regulatory powers the Fed possesses) or former Fed Vice Chair Kohn (a career Fed official who has “seen it all”).“
- “Larry Summers’ withdrawal from the race for Fed chair will likely be interpreted by markets as bullish for US interest rate curve trades, duration more generally, and risk assets (including credit and equities),” wrote PIMCO’s Mohamed El-Erian in a piece for Business Insider. “It may also impact the manner in which the outcome of this week’s important Fed policy meeting is interpreted by markets.”
- Industrial production accelerated to 0.4% growth in August, while slightly missing expectations for 0.5% growth. “The rise in manufacturing activity is somewhat consistent with a much stronger set of readings from the ISM survey, which showed production above 6% over July and August; the latter suggests manufacturing production should accelerate further,” said Deutsche Bank’s Joe LaVorgna.
- The Empire State Manufacturing index unexpectedly fell to 6.29 in September from 8.24 in August.
- Shares of Apple (AAPL) fell by 3% today. The sell-off came after reports of weak Chinese pre-orders for iPhones.