Stocks rebound from steep selloff

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Stocks are rebounding today after yesterday's selloff draws buyers to the market.

S&P 500 futures are up about one-third of a percent this morning. European markets are stronger, led by gains of more than 1 percent in Italy and Spain, amid brightening sentiment in the region. Asian markets also climbed in the overnight session, paced by a 1 percent move in Tokyo.

Stocks are also rising after the White House said Janet Yellen would be nominated as head of the Federal Reserve. She's considered a dove who will keep easy-money policies in place.

Nonetheless, the bigger catalyst remains political deadlock in Washington. The S&P 500 fell 1.23 percent yesterday, its biggest decline since late August, as House Republicans and the White House made little progress toward passing a budget to reopen the government. That continues to spur fears of a default with the United States scheduled to reach its borrowing limits on Oct. 17.

The drop left the index below its 100-day moving average, a level where it had bounced in June and early September. Price action has also been turning more cautious in the last week as stocks such as transports and small caps lag--the opposite of what happened in earlier declines. Our researchLAB market scanner also shows money shifting to more conservative sectors such as utilities and consumer staples.
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Commodities are mostly lower despite the equity-market gains. Oil is down fractionally, while copper, gold and silver are falling by more than 1 percent. Agricultural products are mixed.

Dollar strength is the main theme in currency markets as the greenback gains against the Japanese yen and the euro.

In company-specific news, Alcoa rose 3 percent after reporting better-than-expected earnings and revenue. Men's Wearhouse is soaring 34 percent after receiving a takeover offer from Jos. A Bank and Family Dollar fell almost 3 percent on weak forward guidance.

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