Newspaper article The Canadian Press

Toronto, U.S. Stock Markets Mostly Rise as Fed Chair Contender Withdraws

Newspaper article The Canadian Press

Toronto, U.S. Stock Markets Mostly Rise as Fed Chair Contender Withdraws

Article excerpt

Markets mostly rise as Fed chair contender exits

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TORONTO - North American markets were mostly higher as investors bet that stimulus funding from the Fed will continue to flow for a little while longer following news that economist Larry Summers is out of the race for the top job at the U.S. central bank.

The S&P/TSX composite index climbed 93.48 points to 12,816.88. The Canadian dollar lifted 0.20 of a cent to 96.93 cents US.

Larry Summers has long been perceived as an opponent to the Fed's aggressive $85 billion a month bond-buying program, which has helped push down interest rates to spur lending and jump-start economic growth. The program, dubbed quantitative easing, has also weakened the U.S. dollar and boosted stock markets.

The Dow Jones industrials surged 118.72 points to 15,494.78 and the broader market measure, the S&P 500, added 9.61 points to 1,697.60.

"Certainly, markets are interpreting Summers' withdrawing from the race as Fed chairman implies that quantitative easing could persist for longer, that (higher) interest rates could be pushed further into the future," said Paul Ferley, assistant chief economist at the Royal Bank of Canada.

The departure of Summers, who was considered to be President Barack Obama's first choice to succeed current Fed chairman Ben Bernanke, now puts vice-chair Janet Yellen in the lead for the position. Yellen is believed to be a supporter of the bank's stimulus program.

Obama is expected to make the nomination as early as this month.

The development comes as the Fed is set to make a key announcement Wednesday on what it plans to do about the asset purchases. It's widely expected that the central bank will announce that it'll begin tapering anywhere between US$10 billion to US$15 billion a month on signs that the U.S. economic recovery is moving forward. What is still left up in the air is at what pace the money will be rolled back.

Meanwhile, after being positive for most of the day, the Nasdaq fell 4.34 points to 3,717.85, pulled down by losses from tech giant Apple Inc., which unveiled two new iPhone models last week. Apple (Nasdaq:AAPL) fell more than three per cent, or $14.78, to close at US$450.12.

After weeks of uncertainty over Syria, United Nations inspectors confirmed Monday that chemical weapons were used on a relatively large scale in an attack last month in Syria that killed hundreds of people.

The findings represent the first official confirmation by scientific experts that chemical weapons have been used in Syria's civil war, but the report left the key question of who launched the attack unanswered. …

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