* Summers in surprise withdrawal from Fed chair
* Fed to meet this week for decision on stimulus' future
* Obama says he will not negotiate on debt ceiling
* Options trading halted due to systems glitch
* Indexes: Dow up 0.77 pct, S&P up 0.57 pct, Nasdaq off 0.12
By Chuck Mikolajczak
NEW YORK, Sept 16 U.S. stocks advanced on Monday
after former Treasury Secretary Lawrence Summers withdrew as a
candidate for Federal Reserve chairman, lifting some market
uncertainty about what was heading towards a contentious
Early enthusiasm faded, however, after President Barack
Obama stood firm in warning Republicans in Congress he will not
negotiate over an extension of the U.S. debt ceiling as part of
a budget fight.
"We are still riding positively on the Summers announcement,
however with the debt ceiling deadline less than a couple of
weeks away, there will be heightened sensitivity to it," said
Andre Bakhos, managing director at Janlyn Capital LLC in
Bernardsville, New Jersey.
"We are still up and the market is still riding a wave
higher and until there is something tangible to create a sense
of fear, the trend remains solid."
Adding to investor angst, options trading on several major
exchanges, including the Nasdaq OMX PHLX and CBOE
Holdings was halted in the early afternoon due to
system issues at the centralized Options Price Reporting
Authority, the latest prominent disruption to the operations of
Investors cheered Summers' decision, as the move likely
means an easier path for the eventual nominee for Fed chief, and
it also has added to expectations that the Fed will continue its
current accommodative path.
Summers was seen as more prone to wind down stimulus than
the new front-runner, Fed Vice Chairwoman Janet Yellen.
Summers' surprise decision on Sunday came just days before
the U.S. central bank will meet to decide when, and by how much,
to scale back its bond purchases, or quantitative easing.
Housing stocks climbed as investors bet on downward pressure
on mortgage rates. The PHLX housing index climbed 1.4
percent. Among individual stocks, D.R. Horton rose 3.7
percent to $19.85.
The Dow Jones industrial average rose 118.72 points
or 0.77 percent, to 15,494.78, the S&P 500 gained 9.61
points or 0.57 percent, to 1,697.6, and the Nasdaq Composite
dropped 4.338 points or 0.12 percent, to 3,717.846.
The earlier gains helped briefly push the S&P back above the
1,700 level for the first time since early August.
The Nasdaq Composite was weighed down by a drop in Apple
shares. Apple fell 3.2 percent to $450.12, and is down
more than 11 percent in the last five sessions, after investors
were disappointed by the new products and prices introduced last
Summers was regarded as more eager to scale back the Fed's
$85 billion a month bond buying. Yellen is perceived as favoring
a more gradual easing of stimulus and emphasizing the need to
lower the unemployment rate.
Packaging Corp of America said it would acquire
smaller rival Boise Inc for about $1.28 billion to boost
its container board capacity. Packaging Corp of America shares
jumped 10.8 percent to $60.43 and Boise rallied 26.1 percent to
U.S. industrial production rose in August as a bounce-back
in motor vehicle assembly lifted manufacturing output, a hopeful
sign for the economy after growth got off to a slow start in the
A separate report for September showed the pace of growth in
New York state's manufacturing sector unexpectedly slowed this
month, but firms' outlook brightened.
Volume was light with about 5.63 billion shares traded on
the New York Stock Exchange, NYSE MKT and Nasdaq, below the
daily average of 6.24 billion.
Advancing stocks outnumbered declining ones on the NYSE by
2,027 to 951, while on the Nasdaq, advancers beat decliners
1,372 to 1,135.