Dow Futures Rally As Summers Exits Fed Race

LONDON — Stock index futures at 7am ET indicate that the Dow Jones Industrial Average (DJINDICES: ^DJI) may open up 1.0% this morning, while the S&P 500 (SNPINDEX: ^GSPC) may also open up 1.0%. The CNN Fear & Greed Index remains neutral, and is set to open at 47, after closing at 46 on Friday.

Stock markets rose in Asia and Europe this morning, as investors welcomed the decision of former US Treasury Secretary Lawrence Summers to withdraw from consideration as the next chairman of the Federal Reserve. Current Fed vice-chairwoman Janet Yellen is now the odds-on favourite to replace Ben Bernanke, and investors expect Yellen to be more supportive of a slower pace of tapering than Summers may have been.

In Europe, all the main markets moved higher this morning, and at 7am ET, the FTSE 100 was up 0.81%, the DAX was up 1.25%, and the CAC 40 was up 0.84%. Notable exceptions to the widespread gains included Mexican-focused silver and gold miner Fresnillo, which tumbled 12% on news that the Mexican government is considering a 7.5% levy on miners’ profits.

In the US today, investors are likely to remain focused on the Fed and on the weekend deal between the United States and Russia, aimed at overseeing the disarmament of Syria’s chemical weapons arsenal. However, today’s economic reports may also be relevant, ahead of tomorrow’s meeting of the Federal Open Markets Committee. At 8.30am, the Empire State Index is expected to have risen to 9.4 in September, up from 8.3 in August. At 9.15am, August’s industrial production report is expected to show a 0.4% increase in industrial output in August, after a flat reading in July. Capacity utilization is also expected to have improved in August, rising to 77.8% from 77.6% in July.

No major company earnings reports are due today, but Intel may rise when trading starts; the chipmakers stock was up by 1.5% in pre-market trading this morning and closed up 3.6% on Friday, after an upgrade from brokers Jefferies. Internet rumours are also suggesting that the main processor chip in the new Apple iPhone 5S may now be made by Intel, rather than regular Apple manufacturer Samsung. Retailer Safeway may also see further action after closing up 6.1% on Friday.

Finally, let’s not forget the Dow's daily movements can add up to some serious long-term gains. Indeed, Warren Buffett recently wrote: "The Dow advanced from 66 to 11,497 in the 20th Century, a staggering 17,320% increase that materialized despite four costly wars, a Great Depression and many recessions."

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> Roland does not own shares in any of the companies mentioned in this article. The Motley Fool owns shares in Apple.