NEW YORK -- U.S. stocks rose, sending the Standard & Poor's 500 Index to a five-week high and within 1 percent of a record, after Lawrence Summers withdrew his bid to be Federal Reserve chairman and tensions over dealing with Syria's chemical weapons eased.
Boeing rallied 3.9 percent to pace gains among industrial shares after Sterne Agee & Leach raised its price target. PulteGroup and D.R. Horton climbed at least 3.6 percent as housing stocks surged. Bristol-Myers Squibb added 3.6 percent after JPMorgan Chase advised investors to buy the shares. Packaging Corp. of America jumped 11 percent after it agreed to buy Boise Inc. for about $1.27 billion. Apple fell 3.2 percent, continuing its slide since introducing the latest iPhone on Sept. 10.
The Standard & Poor's 500 Index added 0.6 percent to 1,697.60 at 4 p.m. in New York, after earlier rising as much as 1 percent. The Dow Jones Industrial Average advanced 118.72 points, or 0.8 percent, to 15,494.78. About 5.7 billion shares changed hands on U.S. exchanges, 4.5 percent below the three- month average.
"I don't think the market
knew what kind of a Fed chairman Summers would be, and having him out of the running makes things look a lot more certain," Colleen Supran, a principal of Bingham, Osborn & Scarborough in San Francisco, which manages $2.7 billion, said in a phone interview. "This tapering announcement that's expected for Wednesday seems to be accepted by the markets. It's probably going to be modest."
Summers withdrew from contention before a two-day Fed meeting starting Tuesday. The former Treasury secretary would tighten policy more than Janet Yellen, who was his main rival to replace Chairman Ben Bernanke, according to a Bloomberg Global Poll of investors, analysts and traders last week.
Summers, 58, was one of three names that Obama had mentioned as possible replacements for Bernanke, whose term as Fed chairman ends on Jan. 31. Yellen, 67, the current Fed vice chairman, was also on Obama's candidate list along with Donald Kohn, 70, a former Fed vice chairman, the president said earlier.
The S&P 500 rose 2 percent last week and on Monday came within five points of its record high of 1,709.67 on Aug. 2. The benchmark gauge has rallied nine of 10 sessions this month, rising 4 percent to rebound from the worst monthly loss since May 2012, as reports showed China's economy strengthened and the U.S. looked less likely to attack Syria.
The U.S. and Russia struck a deal on Saturday demanding the destruction of Syria's chemical weapons by mid-2014, with the U.S. saying it maintained a military option to ensure compliance.
Economists expect the U.S. central bank to reduce its $85 billion in monthly bond-buying by $10 billion this week, according to the median forecast in a Bloomberg News survey. The stimulus has helped the S&P 500 rally more than 150 percent from its March 2009 low.
Investors have been closely watching data to determine the timing and pace of any Fed stimulus reductions. A report Monday showed manufacturing in the New York region expanded less than forecast in September even as orders and shipments picked up. Separate data showed industrial production rose in August by the most in six months, indicating U.S. manufacturing will contribute more to the expansion.