Stocks shrug off shutdown

MGN ONLINE
Tuesday, October 1, 2013 - 9:40am

Congress failed to pass a budget and triggered a government shutdown for the first time in nearly two decades Tuesday. But Wall Street took Washington's latest breakdown in stride.

The Dow Jones industrial average, S&P 500 and Nasdaq all edged modestly higher early Tuesday. World markets also rose, while the dollar slipped against other major currencies.

It may seem like a surprise that stocks were up. But the market had sold off during the past few days leading up to the shutdown. The Dow and S&P 500 declined for seven of the last eight trading days, including the Dow's triple-digit loss on Monday.

Many investors are expecting the shutdown to be resolved quickly, risking little damage to the overall economy, said Joe Rundle, Head of trading at ETX Capital.

Plus, the market is far more concerned about the looming debt limit deadline. If the government hits its debt ceiling in mid-October, it will not be able to pay all of its bills.

"Republicans and Democrats must find some common ground and tackle their differences in order to formulate a new budget which will raise the debt ceiling," said Rundle.

Investors were also keeping a close eye on the state of the manufacturing sector Tuesday. The Institute for Supply Management monthly report showed that manufacturing expanded more than expected in September, with the index rising to its highest level since April 2011.

Major automakers were also issuing their monthly sales reports throughout the day. Ford shares rose nearly 2% after the automaker reported a 6% jump in sales for September. General Motors shares slipped after the company said sales dropped 11% in September, compared with a year earlier.

In other corporate news, drugstore operator Walgreen beat earnings forecasts, sending shares higher.

Shares of Merck also advanced after the drug maker announced that it plans to cut 8,500 more jobs worldwide.

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