Janet Yellen (PETER PARKS/AFP/Getty Images)
NEW YORK -- Investors hope Obama's nomination of Janet Yellen as chair of the Federal Reserve is the bit of bullish news needed to counteract the mounting worries over the government shutdown.
Yellen would be an historic Fed chairman, if approved, in that she'd be the first woman to hold the post. But investors looking past the matter of gender see Yellen's policies to be more in line with those of outgoing chairman Ben Bernanke, which leans to being supportive of the economy, or "dovish."
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"In terms of monetary policy, this is a win for the doves. It means we'll probably continue to see a very accommodative Fed," says Peter Cardillo, chief market strategist at Rockwell Global Capital.
And the nomination of Yellen comes at a time that the government's prolonged shutdown is starting to unnerve investors. The Dow Jones industrial average slid another 160 points to 14,777 Tuesday as the political stalemate is increasingly raising the fears of a major budget conflict.
Yellen's nomination wasn't a surprise as investors have been expecting her to take the nomination ever since her top competitor for the post, Lawrence Summers, stepped out of the race in September.
Investors didn't have much of a reaction in late trading. Futures on the Dow Jones industrial average were trading only up slightly, 26 points, in the futures market after the news was reported.
"The nomination is coming out in the midst of the Washington turmoil. It might help calm some of the fears of the market," Cardillo says.
"I think the nomination will be viewed positively. The process had dragged along after Larry Summers withdrew himself from consideration, so the rumors had begun again recently that others were being considered for the post. Financial market participants are almost sure to be comfortable with the choice and should welcome one less uncertainty as we deal with debt ceiling worries," says Bill Stone, strategist at PNC Asset Management.