After The Close - The second half of September, a month that historically has been a difficult one for investors, got off to a good start today, further building off of an impressive fortnight of trading to start the 30-day period. The major U.S. equity indexes were up notably at the start of trading today, with investors reacting positively to news that broke late over the weekend, including reports that Larry Summers has withdrawn his name from the race to become the next chairman of the Federal Reserve and that the U.S. and Russia had reached an agreement to decommission Syrian chemical weapons by the middle of next year (more on both topics below). However, as the day progressed the major equity averages backed off of their earlier highs after President Obama warned Congressional Republicans that he would not negotiate over an extension of the U.S. debt ceiling as part of a budget battle that will soon take center stage on Capitol Hill. When all was said and done, the Dow Jones Industrial Average, which at one point was up more than 170 points in intraday trading, and the S&P 500 Index were 119 and 10 points higher, respectively, while the NASDAQ shed a few points, thanks to sluggish performances from the technology and, to a lesser extent, the energy stocks.

As noted, the day’s major news, at least initially, was viewed positively by market participants. Investors cheered word that Larry Summers had withdrawn his name from the race to become the next chairman of the Federal Reserve. The removal of Mr. Summers, who some feel faced obstacles in winning Congressional support, from the list of potential candidates, possibly opens the door for current vice-chairwoman Janet Yellen to receive the nod and replace Fed Chairman Bernanke in 2014. Investors think she would be more deliberate in winding down the central bank’s widely popular aggressive bond-buying program. Speaking of the Federal Reserve, the investment community’s attention will clearly be focused on what the lead bank has to say following the conclusion of its two-day monetary policy meeting on Wednesday afternoon. The growing consensus on Wall Street is that the Fed will gradually begin tapering its asset purchases this month. Any deviation from that thinking could push the markets forcefully in either direction.

From a sector perspective, nearly all of the 10 major groups finished in the plus column. Leadership came from the industrial, consumer staples, and healthcare sectors. Helping the industrial stocks was a positive report on industrial production and capacity utilization for the month of August. It should also be noted that the utilities rallied in the second half of the session after a weak start to the trading day. Meanwhile, the energy and technology stocks were laggards today. Energy issues fell, as oil prices were weaker on the aforementioned likelihood that a strike against Syria—one that had the potential to disrupt the world’s oil supplies—will likely be averted for now. Technology was hurt by weak showings from many of the industry’s big names, including a more than $14-a-share decline in the price of Apple (AAPL) stock.

Notwithstanding the weakness in technology and energy sectors, it was a fairly productive day for those long equities. In addition to the aforementioned averages, the small-cap Russell 2000 and the S&P Mid-Cap 400 Index finished with gains in yet another sign that investors are willing to add more risk to their portfolios. Overall, advancing issues led decliners on both the New York Stock Exchange and the NASDAQ, to the tune of more than two-to-one on the former. That said, the recent stretch of renewed buying interest has once again made the equity market’s valuation a bit frothy and thus susceptible to any disappointing news, including the aforementioned Federal Reserve’s monetary actions and the forthcoming budget and debt ceiling talks on Capitol Hill. The S&P 500 Volatility Index (or VIX), trading below 15 would suggest that the equity market is overextended.   - William G. Ferguson

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.  


12:55 PM EDT -The U.S. stock market is putting in a strong session today. At just past noon in New York, the Dow Jones Industrial Average is up 157 points; the broader S&P 500 Index is adding on 13 points; and the NASDAQ is ahead 11 points. Market breadth suggests an upwards bias to the session, as advancing stocks are outnumbering decliners by about four to one on the NYSE. All of the market sectors are in positive territory, further confirming the broad based buying of equities. There is notable leadership in the basic materials stocks, thanks to strength in the iron and steel names. The industrial issues are also advancing, as shares of heavy construction companies are doing well. While there is no real weakness in the market today, the technology stocks are lagging a bit, with declines in the hardware makers. The utilities are also underperforming, which is not surprising, as traders may be feeling a bit bolder.

Technically, the stock market continues to extend the rally that started in early September. Today’s move puts the S&P 500 back through the widely watched 1,700 mark, and not too far off the high of about 1,710 hit in early August. Further, it is encouraging that we are now seeing the Dow Jones Industrials pick up, as a lack of participation by this blue-chip index had started to become a concern a while back.

The economic news has been mixed today. Industrial production increased 0.4% in August, which contrasts with last month’s unchanged reading, and was largely within the expected range. Elsewhere, the economy in the New York state region has been a bit softer than some had been expecting. Specifically, the Empire State Manufacturing Survey for September came in at 6.3, lower than August’s 8.2 figure. Tomorrow, we get a look at consumer prices for August. On Wednesday, the FOMC will issue a statement on monetary policy, and likely provide some insights into the economy. As is already widely known, Lawrence (Larry) Summers is no longer looking to head the Federal Reserve, and that news is largely behind today’s rally. 

In the corporate world, there have been some mergers and acquisitions of note. Shares of Boise (BZ) are trading sharply higher after that company agreed to be acquired by Packaging Corp. of America (PKG). Further, Kennametal (KMT) has agreed to buy the tungsten operations from Allegheny (ATI). - Adam Rosner

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.


10:45 AM EDT - News about the Federal Reserve this morning is propelling stocks broadly and sharply higher. But it is not suggestions of a possible tapering of the popular bond-buying program that are doing it--at least not directly.

Rather, it is about the withdrawal late yesterday of Larry Summers as a candidate to succeed Ben S. Bernanke as Chairman of the Federal Reserve that has Wall Street in a bullish mood according to most market watchers.

The reason for the euphoria is that Mr. Summers, who along with Fed Vice Chairwoman Janet Yellen, had been considered the two top choices by President Obama to succeed Mr. Bernanke, was thought to be very likely to vigorously pare back the Fed's bond buying. Now, with his exit, buyers are gobbling up stocks as they sense a less-confrontational approach by the central bank.

As to the markets, stocks were higher around the globe overnight, and are pressing forward at a vigorous clip on our shores so far this morning. Of note, the Dow Jones Industrial Average is now up 165 points; the Standard and Poor's 500 Index is better by 14 points; but the NASDAQ, held back by some selective softness in the tech area, is up just 14 points as well, a much smaller percentage gain than for the S&P. Winning issues, meantime, hold a five-to-one advantage on the Big Board, but are better by just about two-to-one on the NASDAQ. Still, this is a formidable advance heading into the Fed's FOMC meeting later this week.  - Harvey S. Katz
At the time of this article's writing, the author did not have positions in any of the companies mentioned.   


Stocks to Watch from The SurveyThere was some M&A activity over the weekend. Most notably, Packaging Corporation of America (PKG), a major producer of containerboard and corrugated products, has agreed to acquire industry peer Boise Inc. for $12.55 a share in cash. Investors on both sides of the deal cheered the proposed arrangement, and PKG stock is up sharply ahead of the bell as a result. Likewise, shares of Sohu.com (SOHU), an online media, search, and mobile value-added services company based in China, are indicating a nicely higher opening this morning, after Internet company Tencent Holdings struck a deal to invest $448 million in Sogou Inc., a subsidiary of Sohu. – Matthew E. Spencer 

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.

Before The Bell - The stock market, following a strong week during the preceding five-day stretch, primarily on optimism that the West was apparently not getting ready for a major military strike against Syria, seems set to begin the new week on another notably bullish note.

Once more, there is relief that an agreement has been reached that should avert such a strike. That news is partly responsible for what seems likely to be a very strong start to the new week on Wall Street. But perhaps a bigger factor, at least according to the current thinking among most market pundits, was the surprise move by Larry Summers, the presumed frontrunner to replace Ben S. Bernanke as Chairman of the Federal Reserve, to take his name out of consideration.

Mr. Summer's decision, made late yesterday afternoon in a letter to President Obama, was something of a surprise. However,  the former Secretary of the Treasury under President Clinton, likely would have faced a difficult time in getting Senate confirmation, due to indicated opposition from many Republicans. This move now places Janet Yellen, the Fed's current vice chairwoman, as the seeming frontrunner to take over for Mr. Bernanke.

The likely reason for the better reception she would get than Mr. Summer's is the evolving perception that she would be more of a proponent of slowly adjusting the monetary course than he would be. That is, the suggested move away from paring the popular bond-buying program and then raising interest rates would probably be much more gradual than under Mr. Summers, who is regarded as less of a consensus builder.

This combined good news, at least among many Wall Street professionals, has sent stocks up sharply around the world so far today, with shares in Europe this morning up nearly a full percentage point. Meanwhile, on our shores, the Standard and Poor's 500 Index futures are ahead by more than 15 points, while the NASDAQ futures are better by some 24 points. It should be noted that as welcoming as these indications are, they represent a comedown from earlier in the morning when the S&P futures had been up by some 21 points and the NASDAQ futures had been higher by about 40 points.

Meanwhile, there will be a lot of other things going on this week, most notably in the economy and at the Federal Reserve, where in a few minutes from now the Commerce Department will issue data on industrial production and capacity utilization. Modest increases are expected in both of these indexes. Then, tomorrow morning, the Labor Department will issue data on consumer prices for August. This will be followed on Wednesday morning with reports on housing starts and building permits, while Thursday will bring weekly jobless claims and sales of existing homes surveys.

In between all of this, the Federal Reserve will hold its two-day FOMC meeting starting tomorrow morning. Expectations there are that the lead bank may start to slowly and not very aggressively, taper its monetary policies, namely by slowing down the purchases of bonds.

Thus, after a presumptive early gain this morning for the stock market, a busy week could take hold and one that might have a good deal of influence on where the market ends up. Stay tuned. – Harvey S. Katz

At the time of this article's writing, the author did not have positions in any of the companies mentioned.