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Wall Street put an end to a harsh two-day selloff after a steady stream of news on the Federal Reserve provided traders a welcome reprieve from the obsession with strife in Congress.
The Dow Jones Industrial Average climbed 26.5 points, or 0.18%, to 14803, the S&P 500 rose 0.95 point, or 0.06%, to 1656 and the Nasdaq Composite fell 17.1 points, or 0.46%, to 3678.
Wall Street finally got a reprieve from Congress ... but not Washington, D.C.
President Barack Obama nominated Federal Reserve Vice Chairman Janet Yellen to be the next head of the central bank, succeeding Ben Bernanke. Bernanke has had perhaps one of the most tumultuous runs as Fed chair, steering the world's biggest economy through the worst financial crisis since the Great Depression. If Yellen becomes the next Fed chief, it will be up to her to unwind the central bank's unprecedented asset-buying program and eventually begin lifting interest rates.
Yellen is seen as on the dovish side of the spectrum -- supporting aggressive easing -- so the move came as positive news for market participants, especially in emerging markets where worries about tapering have taken a steep toll.
"Yellen’s nomination is a clear signal that the highly accommodative monetary policy stance will likely remain in place," Michael Gapen, an economist at Barclays wrote to the investment bank's clients. "Although Yellen has not made a public speech in some time to avoid any potential conflict with the nomination process, her views on monetary policy have been consistent during the recovery phase and we see it as unlikely that her views have changed markedly in recent months."
Also on the Fed front, members of the Federal Reserve’s policy-setting board looked to signal to market participants the central bank is ‘prepared to be patient’ in its plans to trim its vast bond-buying program, minutes from the September FOMC meeting show.
The minutes said the policy-setting board remained concerned about “mixed” economic data, tightening financial conditions and political strife in Congress.
Still, traders and analysts continued paying very close attention to events in Washington, D.C., where a partial government shutdown dragged into its ninth day. Lawmakers remained deadlocked as a scarier October 17 deadline to boost the U.S. debt ceiling loomed just days away.
"With no imminent resolution to the US political deadlock, there are increasing signs of nervousness in markets as the 17 October deadline approaches," analysts at Barclays told clients, citing developments in the fixed income market.
Indeed, Potomac Research Group, a Washington, D.C.-based political consultant, issued a note to clients saying the chances of a default on American debt are slim but rising. PRG said the far right flank of the Republican party still seems unwilling to budge on its demands that ObamaCare be delayed or repealed as part of a fiscal resolution.
"This is the Alamo, it's Braveheart, battles to the death," PRG said of the fight in Congress.
Elsewhere, in corporate news, Alcoa (NYSE:AA) unofficially kicked off earnings season with a beat on the top and bottom lines in its first earnings report since being booted from the Dow Jones Industrial Average. Jos. A. Bank offered to pay $2.3 billion to buy competitor Men's Wearhouse (NYSE:MW).
In commodities, U.S. crude oil futures fell 20 cents, or 0.18%, to $103.31 a barrel. Wholesale New York Harbor gasoline climbed 0.22% to $2.637 a gallon. Gold slid $14.60, or 1.1%, to $1,310 a troy ounce.
The Euro Stoxx 50 climbed 0.48% to 2917, the English FTSE 100 dipped 0.07% to 6361 and the German DAX gained 0.11% to 8565.
In Asia, the Japanese Nikkei 225 rallied 1% to 14038 and the Chinese Hang Seng fell 0.63% to 23034.