Stocks Jump as Summers Exits Fed-Chief Contest; Apple Weighs

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Wall Street cheered news that Larry Summers will be bowing out of the race to become the next Fed chief. However, tumbling Apple shares restricted the Street's gains.

Today's Markets

The Dow Jones Industrial Average rallied 119 points, or 0.77%, to 15495, the S&P 500 jumped 9.6 points, or 0.57%, to 1678 and the Nasdaq Composite fell 4.3 points, or 0.12%, to 3718.

The Dow posted its best biggest gains since early January last week as worries cooled about Syria and the Federal Reserve's plans to pare back its vast bond-buying program. The focus was expected to center around the Fed this week.

Former Treasury Secretary Larry Summers took his hat out of the ring for consideration to be the next Fed chairman Sunday amid concerns over a potentially caustic confirmation fight. The move almost immediately ricocheted through financial markets.

Summers' sudden withdrawal "opens the door for (Fed Vice Chairman) Janet Yellen to take over the top spot," said Todd Schoenberger, managing partner at LandColt Capital in New York. Analysts at Potomac Research Group, a Washington-based political consultancy, echoed that thinking, writing to clients that Yellen is now the "clear favorite."

"Wall Street will praise the idea that a decision on Yellen is imminent, and that she is most likely to continue to stay with the current Bernanke thesis," Schoenberger said, pointing to the aggressive easing program the central bank has embarked on.

However, Shoenberger noted that what's good for Wall Street might not be good for the economy, questioning whether more asset purchases will make a material change in the economic trajectory.

The central bank kicks off its critical September policy-setting meeting on Tuesday. Analysts expect the Fed to taper its bond purchases down by $10 billion a month to $75 billion, and potentially adjust the mix of assets it buys.

Also on the economic front, the New York Federal Reserve's gauge of manufacturing activity in the Empire State region dropped to 6.3 in September from 8.2 in August, widely missing expectations the measure would rise to 9.2. Readings above 0 point to expansion, while those below indicate contraction.

Elsewhere, in corporate news, Apple (NASDAQ:AAPL) shares came under heavy selling pressure on worries that its popular iPhone is losing its edge. The movement put the tech-heavy Nasdaq under pressure and also weighed on the more well-balanced S&P 500.

In commodities, U.S. crude oil futures dropped $1.60, or 1.5%, to $106.60 a barrel. Wholesale New York Harbor gasoline slid 1.8% to $2.72 a gallon. Gold rose $3.60, or 0.28%, to $1,312 a troy ounce.

Foreign Markets

The Euro Stoxx 50 jumped 0.92% to 2894, the English FTSE 100 rallied 0.93% to 6645 and the German DAX surged 12% to 8615.

In Asia, the Japanese Nikkei 225 edged up by 0.12% to 14405 and the Chinese Hang Seng rallied 1.5% to 23252.