Hopefully Larry Summers has a family that loves him, because investors apparently do not. Global markets rejoiced on the news of Summers’ withdrawal from consideration to be the next chair of the Federal Reserve, with the Nasdaq, S&P 500 and the Dow all spiking Monday morning.
The Dow Jones Industrial Average spiked 150 points at open, coming to within 1% of its all-time high, according to a CNBC report. Meanwhile, the Nasdaq hit a 13-year high and the S&P 500 broke 1,700.
Summers’ candidacy vexed investors who worried his more hawkish take on fiscal policy might put an end to some of the stimulus programs introduced under the tenure of current Fed Chairman Ben Bernanke.
Summers, though a favorite of the Obama Administration, also had his detractors on both sides of the aisle in Congress. Four of the 12 Democrats on the Senate Banking Committee stated that they would oppose his confirmation.Rather than face a contentious confirmation process, Summers chose last weekend to withdraw his name from consideration.
"I have reluctantly concluded that any possible confirmation process for me would be acrimonious and would not serve the interests of the Federal Reserve, the Administration, or ultimately, the interests of the nation's ongoing economic recovery," Summers wrote in a letter to President Barack Obama.
Summers’ withdrawal leaves Fed vice chair Janet Yellen as the presumed front-runner for the top spot – a state of affairs many investors seem to find agreeable, as most expect Yellen would continue Bernanke’s policies.
"The market will, at the margin, see (Summers’) withdrawal as one which prolongs unorthodox policy for longer — partly because it moves the more dovish Yellen up the favorites list for the new job," said Deutsche Bank's Gael Gunubu in a research note obtained by CNBC.