Stocks, bonds rise after Summers exits race for Fed chairman; investors expect more stimulus

Lawrence Summers.
Lawrence Summers.

NEW YORK — Stocks and bonds are rising sharply after former Treasury Secretary Larry Summers withdrew from the race to become head of the Federal Reserve.

Mr. Summers had been expected to move aggressively to rein in the Fed’s huge economic stimulus program.

The Dow Jones industrial average rose 163 points, or 1 percent, to 15,540 as of midday today.

President Obama is expected to nominate Ben Bernanke’s successor as early as this month. The front runner is Janet Yellen, the Fed’s vice chair.

The Standard & Poor’s 500 index rose 15 points, or 0.9 percent, at 1,703. The Nasdaq composite rose 15 points, or 0.4 percent, at 3,737.

Bond prices rose, pushing yields lower. The yield on the 10-year Treasury note fell to 2.81 percent from 2.88 percent late Friday.