Stocks are rallying today on news that former Treasury Secretary Lawrence Summers won't become the next chairman of the Federal Reserve. Janet Yellen, now the leading the contender, is considered less likely to reduce monetary stimulus in the near term.
S&P 500 futures are surging more than 1 percent, exceeding most of the gains in Europe. Asia was mostly higher, led by Thailand, Singapore, and Hong Kong. (Tokyo was closed for a holiday.) Interest rates are falling as well, sending the U.S. dollar lower.
The S&P 500 spent the last three days in a tight range after climbing in early September. Today's rallying brings the index back to striking distance of its previous all-time high near 1710 at the beginning of August. Sentiment has remained buoyant toward stocks on mounting evidence of a stronger global economy and as investors continue to buy pullbacks.
Interest rates yields are likely to be a major catalyst in coming weeks because the market has already priced in a reduction of the Fed's asset purchases. If the central bank now proves more dovish, bond yields could retreat from their recent highs. That could spur buying in financials, homebuilders, utilities, precious metals, and emerging markets.
This week's calendar keeps the Fed in focus, with its key monetary-policy announcement scheduled for Wednesday afternoon. Today's calendar brings the New York Fed's Empire Manufacturing index and industrial-production numbers. Neither is likely to affect sentiment, but both will provide clues on the state of the economy
Summers' defeat also represents the second major setback for President Barack Obama this month after Congress rejected his calls for military strikes against Syria. Liberal Democrats, his key constituency, opposed him in both cases. That could also prove important for coming budget fights on Capitol Hill.
Dollar weakness is the main trend in foreign-exchange markets, with the euro up almost half a percent. The Australian dollar, favored for its higher yield against the greenback, surged 1.5 percent. The Canadian loonie, also associated with global growth, rose half a percent as well. Japan's yen is little-changed.
Trading is less clearly bullish in commodity markets, with oil plunging 2 percent on the belief that a war with Syria is less likely. Copper is posting small gains, but gold and silver are lower while agricultural products are mixed.
In company-specific news, forest products company Boise is surging 26 percent after it agreed to be purchased by Packaging Corp. of America. PKG also rallied 10 percent on the news. Chinese Internet stock Sohu rose almost 10 percent after selling a 37 percent stage in its Sogou search engine to Tencent Holdings.
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