Stocks are rebounding today as investors bet that politicians in
Washington will quickly end a budget stalemate that has closed the
S&P 500 futures rose about one-quarter of a percent, matching
gains of a similar magnitude in Europe. Asian markets also climbed.
Higher-beta countries, such as Thailand, Italy and Spain, led the
advances on both continents, reflecting risk appetite by investors.
The S&P 500 was down 1 percent at its lows yesterday before
rebounding to close above its 50-day moving average. The mix of
price action was also mostly bullish, with transports and
small-caps outperforming their larger and more stable peers.
Today marks the first time in 17 years that the federal government
has shut down because lawmakers failed to agree on a budget. House
Republicans want to use the occasion to delay the Obamacare
health-care overhaul, a move rejected by the Democrat-controlled
Senate and White House. Politicians also need to raise the nation's
debt ceiling by the middle of October. It will likely hurt investor
sentiment if both issues remain deadlocked for long.
In addition to politics, this week is full of economic data. Today
brings the Institute for Supply Management's key manufacturing
survey at 10 a.m. ET, along with construction spending at the same
time. Attention shifts to employment tomorrow, with the ADP
private-sector payrolls report. Non-farm payrolls, often the most
important release of the month, comes Friday morning. (See our
Trading is mixed in foreign-exchange and commodity markets. The
euro is inching higher against the U.S. dollar, but the Japanese
yen is up against both currencies--often a sign of caution. Copper,
which also follows sentiment toward the global economy, is also
down almost 1 percent. Precious metals are posting smaller declines
and oil is little changed. Agricultural foodstuffs are mostly
In company-specific news, Walgreen is up more than 1 percent after
fourth-quarter earnings beat estimates. Diamond Foods fell 8
percent in extended hours last night after predicting "significant
sales and contribution headwinds" in the current quarter but hasn't
traded yet this morning.
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