New York Report: Obama curbs market gains with debt talk

US stocks advanced yesterday 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 confirmation process.

Early enthusiasm faded, however, after President Barack Obama stood firm in warning Republicans in Congress he will not negotiate over an extension of the US 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 centralised Options Price Reporting Authority, the latest prominent disruption to the operations of US markets.

Housing stocks climbed as investors bet on downward pressure on mortgage rates. The PHLX housing index climbed 1.4 per cent.

The Dow Jones industrial average rose 118.72 points or 0.77 per cent, to 15,494.78, the S&P 500 gained 9.61 points or 0.57 per cent, to 1,697.6, and the Nasdaq Composite dropped 4.338 points or 0.12 per cent, to 3,717.846.