U.S. stocks shed session highs as Summers exits from Fed race

U.S. stocks shed earlier gains and closed mixed on Monday, as former U.S. Treasury Secretary Lawrence Summers pulled out of the race for Federal Reserve chairmanship, currently held by Ben Bernanke.

The Dow Jones Industrial Average surged 118.72 points, or 0.77 percent, to 15,494.78 points. The Standard & Poor's 500-stock Index rose 9.61 points, or 0.57 percent, to 1, 697.60 points. The Nasdaq Composite Index was down 4.33 points, or 0.12 percent, to 3, 717.85 points.

Summers' withdrawal could leave his main competitor Janet Yellen, currently the Fed's vice chairwoman, as the front runner for the top job. Yellen, a well-known policy dove, is expected to continue Bernanke's easy monetary policies.

The news came in ahead of the widely-anticipated Fed policy meeting scheduled for Tuesday and Wednesday.Most economists expect the central bank to announce the first taper of its monetary stimulus at the meeting.

Moreover, positive news about Syria added momentum to the rally of the stocks. U.S. Secretary of State John Kerry and his Russian counterpart Sergei Lavrov reached an agreement Saturday after three days of intense negotiations on a framework to secure and destroy Syria's chemical weapons by mid-2014.

However, the market trimmed earlier gains in later trading session after the S&P 500 returned to the psychologically important level of 1,700 points for the first time in over one month.

The tech-heavy Nasdaq ended in negative territory, dragged down by Apple, whose shares dipped 3.18 percent to 450.12 U.S. dollars.

On the economic front, manufacturing activity in the New York region improved modestly for the fourth straight month in September, said the Federal Reserve Bank of New York in a report Monday. The general business conditions index for September edged down to 6.3 from 8.2 in August, but remained in positive territory, it said.

U.S. industrial production advanced 0.4 percent in August after staying unchanged in July, the Fed reported Monday.

In other markets, oil prices fell to a two-week low on Monday as the agreement between the U.S. and Russia eliminated the possibility of a military strike on Syria in the near future.

Light, sweet crude for October delivery moved down 1.62 dollars to settle at 106.59 dollars a barrel on the New York Mercantile Exchange. Meanwhile, Brent crude for October delivery dropped 2.71 dollars to close at 110.07 dollars a barrel.

The U.S. dollar slipped against major currencies on Summers' withdrawal. In late New York trading, the euro climbed to 1.3333 dollars from 1.3307 dollars of the previous session, and the dollar bought 99.17 Japanese yen, lower than 99.28 yen of the previous session.

Gold futures on the COMEX division of the New York Mercantile Exchange ended higher Monday for the first time in five trading sessions, as Summers' withdrawal cut expectations for an early end to the central bank's stimulus measures.

The most active gold contract for December delivery rose 9.2 dollars, or 0.70 percent, to settle at 1,317.8 dollars per ounce.