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Stocks get boost from Summers withdrawal

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Stocks get boost from Summers withdrawal

US stocks surged on the open on the heels of news that Larry Summers was withdrawing his name from consideration as the next Federal Reserve Chairman.  Summers was considered President Obama’s front running candidate, but many expected his confirmation would be difficult as he has a contentious personality, one that might not fit with the demeanor needed as the Fed Chairman.

Later this week the Federal Reserve is expected to meet and determine the fate of the current bond purchase program.  The Feds two day meeting ends on Wednesday September 18, were many expect the Fed to reduce its purchases by approximately 10 billion dollars per month down to 75 billion per month.

In corporate news Sears Holdings Corporation (NASDAQ:SHLD) says it intends to obtain a senior secured term loan facility of up to $1.0 billion. If consummated, the Incremental Term Loan would be issued under the Existing Credit Agreement, which currently provides for a $3.275 billion asset-based revolving credit facility. The company intends to use the net proceeds of the Incremental Term Loan to reduce borrowings under the Revolving Facility.

Yields in the US helped stocks gain traction.  The 10-year note increased in price as yields declined back toward the 2.8% level.  Yields have tested the 3% level multiple times but many believe that a Yellow FOMC would keep rates lower longer, allowing stocks to continue to gain momentum.

Toward the end of the trading session, stocks moved toward the low end of the daily range, as Apple shares continued to face downward pressure.  The drag from Apple pushed the Nasdaq into the red, as investors continued to punish the tech giant on the heels of their disappointing product announcement.

The S&P finished the session up nearly 0.6%, moving closer to resistance levels near the all-time highs at 1,710.

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