US STOCKS-Futures jump as Summers withdraws from Fed race

Mon Sep 16, 2013 7:38am EDT
 
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* Obama accepts Summers withdrawal from Fed chair consideration

* Major U.S. stock indexes set to jump about 1 percent at open

* Futures up: S&P 17.8 pts; Dow 167 pts; Nasdaq 35.3 pts

By Angela Moon

NEW YORK, Sept 16 (Reuters) - U.S. stock index futures soared on Monday as investor bet that the exit of Lawrence Summers as a candidate for chairman of the Federal Reserve could mean a slower scaling back of monetary stimulus by the U.S. central bank.

News of Summers' surprise decision on Sunday afternoon came before the U.S. central bank meets on Tuesday and Wednesday to decide when and by how much to scale back its asset purchases from the current pace of $85 billion a month.

S&P 500 futures rose 17.8 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures rose 167 points, and Nasdaq 100 futures added 35.3 points.

Of the two perceived leading candidates for the Fed chairmanship, Summers was widely regarded as more eager to taper the Fed's $85 million a month bond-buying program. Janet Yellen, the Fed's current vice chair and the other candidate seen as a leading contender, has been more widely perceived by investors as favoring a more gradual easing of stimulus.

"With (Timothy) Geithner showing no signs to fill Summers' post, it seems likely that President Obama will choose Yellen, which is good in terms of the prospects of the Fed staying on hold for some time," said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.   Continued...