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Questions over next Fed chief a bigger issue than taper

Douglas Graham | Roll Call | Getty Images

No Larry Summers at the Fed may have triggered a bigger market reaction than the Fed will muster with its own policy statement Wednesday.

The former Treasury Secretary was seen as President Obama's first choice until he dropped out of the running this weekend. Summers was expected to face a difficult, if not impossible confirmation process. Stocks rallied Monday, as traders assumed Fed Vice Chair Janet Yellen would now be named to replace Fed Chairman Ben Bernanke when he leaves at year end. She is viewed as more dovish and more of a consensus builder than Summers.

(Read more: Obama's move to pack the Fed may have hit a snag)

That drove the stock market sharply higher though it closed off its highs. was up 118 points at 15,494, and the S&P 500 was up 9 at 1697. Traders said short-covering helped push the market higher during morning trading. The yield on the 10-year note declined by more than a tenth of a point but selling pressure sent yields higher later in the day. The 10-year ended the day with a yield of 2.87, slightly off Friday's 2.88 percent.