By Dow Jones Business News, October 01, 2013, 07:25:00 AM EDT
U.S. Stocks Gain Ground Amid Government Shutdown
NEW YORK--Stocks moved higher as investors shrugged off the first U.S. government shutdown in 17 years.
The Dow Jones Industrial Average advanced 63 points, or 0.4%, to 15191 in recent trading. The S&P 500 tacked on 13
points, or 0.8%, to 1695, and the Nasdaq Composite Index rose 39 points, or 1%, to 3810.
Global stocks showed resilience after lawmakers failed to reach agreement to keep the government fully funded to start
the new fiscal year. Senate Democrats and House Republicans remained at loggerheads over government spending and the
launch of the Affordable Care Act.
Traders said that the markets had been anticipating the political gridlock, which has contributed to the Dow falling
seven over the past eight sessions, including Monday's 129-point slide.
"Most people are pretty sure that this is going to be a short-lived event," said Ian Winer, director of equity trading
at Wedbush Securities. "Even though there were big moves leading up to this, most people are positioned for a near-term
shutdown, and it looks like the selling has let up. There's not a lot of new buying, but guys have sold what they wanted
Stocks moved to session highs after U.S. manufacturing activity in September unexpectedly picked up, according to data
released by the Institute for Supply Management. The ISM's manufacturing purchasing managers' index stood at its highest
reading so far this year, rising to 56.2 from 55.7 in August.
Although the partial government shutdown isn't expected to last long, uncertainty over what it might mean for the
economy, combined with worries about protracted political dysfunction ahead of talks to raise the debt ceiling over the
next few weeks, has given pause to buyers in the stock market.
The Commerce Department didn't release Tuesday morning's scheduled release of construction-spending data, the first
economic data report to be affected by the government's partial shutdown.
Colin Cieszynski, senior market analyst at CMC Markets, said that Tuesday's stock-market bounce might not be
sustainable, particularly if the impasse drags out longer than some expect, or impedes an agreement to extend the
government's borrowing limit.
"We could still see quite a bit of volatility over the next several weeks, because you still have the debt-ceiling
talks, and that could drag on," he said. "Politics are pretty unpredictable."
All 10 of the S&P 500's sector groups advanced, led by health-care and technology stocks. Apple shot up 2.1% after
billionaire investor Carl Icahn tweeted Tuesday morning about his dinner with Apple's chief executive, Tim Cook, at
which Mr. Icahn said he "pushed hard" for the tech giant to buy back stock.
Merck was the biggest gainer, up 2.5%, on the Dow after the pharmaceutical company unveiled cost-cutting measures that
include roughly 8,500 additional layoffs. The company aims to save about $2.5 billion a year by the end of 2015.
The U.S. dollar slid against major currencies amid worries that the partial government shutdown could become a larger
drag on the country's economy. October gold futures fell 3% to $1,289 a troy ounce. The yield on the 10-year Treasury
note rose to 2.650% from 2.614% late Monday. November crude-oil futures fell 1% to $101.30 a barrel.
European markets were mostly higher. The Stoxx Europe 600 was up 0.8%, as data showing mild economic improvement
offset uncertainty surrounding the U.S. government shutdown.
Asian markets were little changed. Japan's Nikkei Stock Average rose 0.2% after the Bank of Japan's Tankan survey
showed business sentiment improved for a third-straight quarter, with the key diffusion index rising more than expected.
In other corporate news, Walgreen rose--the S&P 500's biggest advance--after the drugstore chain reported fiscal
fourth-quarter earnings that rose in line with expectations, helped by strength in its pharmacy business and gains in
retail market share.
Ford Motor gained 2.4% after the auto maker reported sales rose 6% in September, led by demand for its F-series pickup
trucks. General Motors gained 0.1% after reporting its U.S. sales last month fell 11%.
Amazon.com edged up 1.7% after the online-retailing giant said it planned to hire 70,000 seasonal workers for its U.S.
warehouses, a 40% increase over last year, given upbeat expectations for the holiday shopping season.
Diamond Foods slumped 12% after the company reported its quarterly loss widened, in part because of litigation-
settlement-related expenses, while the snack-and-nut company's results were hurt by lower nut sales.
Write to Chris Dieterich at email@example.com
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