US stocks rally on hopes of short shutdown
In this Wednesday, Sept. 18, 2013, file photo, specialist Christopher Culhane works at his post on the floor of the New York Stock Exchange after the Federal Reserve announcement. Traders are shrugging off the partial shutdown of U.S. government operations on Tuesday, Oct. 1, 2013, sending stock futures higher. AP
NEW YORK CITY—US stocks Tuesday jumped amid hopes the partial government shutdown will not seriously harm the economy.
The Dow Jones Industrial Average rose 62.03 points (0.41 percent) to 15,191.70.
The broad-based S&P 500 tacked on 13.45 (0.80 percent) at 1,695.00, while the tech-rich Nasdaq Composite Index added 46.50 (1.23 percent) at 3,817.98.
Analysts said many investors had already priced in a government shutdown, limiting the hit when it actually occurred at midnight Monday.
Also, many predict a speedy resolution.
“Most people seem to be pretty optimistic that at some point, a deal will be struck and it won’t go on too long,” said William Lynch, director of investments at Hinsdale Associates.
But Mace Blicksilver, director of Marblehead Asset Management, said it would be “very hard” to extend the gains if the shutdown persisted for several days.
Analysts also pointed to a report showing manufacturing unexpectedly picked up in September. The Institute for Supply Management’s purchasing managers index for manufacturing activity rose to 56.2 percent last month from 55.7 percent in August.
Apple shot up 2.4 percent after activist investor Carl Icahn reported that he lobbied Apple chief executive Tim Cook for a $150 billion share buyback. The two men had a “cordial” dinner Monday night, Icahn said via Twitter.
Ford tacked on 1.9 percent after reporting a 6 percent rise in September auto sales to notch its best September since 2006. But rival General Motors slipped 0.2 percent after disclosing an 11 percent sales decline from a year earlier.
Dow component Merck rose 2.4 percent after announcing 8,500 more job cuts in an effort to save $2.5 billion in annual costs by the end of 2015. The pharmaceutical giant has been under pressure following the expiration of patents on some key drugs.
Online retailer Amazon rose 2.7 percent after announcing it would hire more than 70,000 full-time temporary workers for the holiday retail season, a 40 percent increase over last year.
Drugstore chain Walgreens jumped 4.5 percent after earnings of 73 cents per share bested expectations by a penny.
Bond prices fell. The yield on the 10-year Treasury rose to 2.65 percent from 2.62 percent Monday, while the 30-year rose to 3.72 percent from 3.68 percent. Prices and yields move inversely.
