A trader on the floor of the New York Stock Exchange this month. (Spencer Platt / Getty Images )
NEW YORK -- Stocks shot up nearly 1% on Monday after former Treasury Secretary Lawrence Summers surprised investors by pulling out of the running to be the next chairman of the Federal Reserve.
The Dow Jones industrial average rose 140.05 points, or 0.9%, to 15,516.11 shortly after the opening bell.
The broader Standard & Poor's 500 index rose 13.25 points, or 0.8%, to 1,701.24. The technology-heavy Nasdaq composite gained 16.78 points, or 0.5%, to 3,738.96.
The rally on Wall Street followed major stock markets in Europe, which were up about 1%. Experts saw Summers as less likely to continue the Fed's efforts to hold down interest rates, which have helped fuel this year's stock rally. Summers' decision to drop out was announced Sunday.
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By buying $85 billion a month in bonds, the Fed has tried to stimulate growth by making borrowing cheaper. With rates low, many investors have sought higher returns by investing in riskier assets like stocks.
Janet Yellen, the Fed's vice chairman and an ally of current Fed Chairman Ben Bernanke, had been seen as the other front-runner to replace Bernanke. She was seen as likely to continue the Fed's stimulus programs longer than Summers.
Bonds also rallied on Summers' decision to drop out. The yield on the benchmark 10-year Treasury bond fell about 0.11 of a percentage point to 2.79%. (Bond yields move in the opposite direction of price.)
Summers, who was considered by many to be the likely pick to lead the central bank, had worked as a top economic advisor to President Obama in his first term and had been Treasury secretary during the Clinton administration.
But Summers drew sharp criticism from liberals who saw him as an architect of regulations that contributed to the financial crisis and the Great Recession.
Women's groups also bristled at Summers' nomination, in part because of his comments about women in science and engineering when he was Harvard University's president.
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