Stocks Close Notably Higher As Traders Shrug Off Shutdown - U.S. Commentary

(RTTNews) - After ending the previous session firmly in the red, stocks moved mostly higher over the course of the trading day on Tuesday. With the strength on the day, the tech-heavy Nasdaq reached a new thirteen-year closing high.

The major averages moved to the upside going into the close, ending the day notably higher. The Dow rose 62.03 points or 0.4 percent to 15,191.70, the Nasdaq jumped 46.50 points or 1.2 percent to 3,817.98 and the S&P 500 climbed 13.45 points or 0.8 percent to 1,695.00.

The strength on Wall Street came as traders largely shrugged off concerns about the economic impact of the government shutdown that took effect at midnight.

The Republican-controlled House passed legislation Monday night that would have kept the government running but delayed the implementation of Obamacare.

However, the Democratic-controlled Senate rejected the legislation, resulting in the first government shutdown in seventeen years.

While lawmakers have thus far not shown much willingness to compromise, traders seemed to be expressing optimism that the shutdown will be short-lived.

Positive sentiment was also generated by a report from the Institute for Supply Management showing an unexpected increase by its index of U.S. manufacturing activity.

The ISM said its purchasing managers index edged up to 56.2 in September from 55.7 in August, with a reading above 50 indicating growth in the manufacturing sector. Economists had been expecting the index to dip to 55.0.

With the unexpected increase, the index of activity in the manufacturing sector rose to its highest level since April of 2011.

"Overall, a very encouraging report," said Amna Asaf, an economist at Capital Economics. "The headline index is roughly consistent with annualized GDP growth in the third quarter of between 2.5% and 3.0%, which would be slightly better than the second quarter's 2.5%."

Sector News

Healthcare-related stocks showed a strong upward move on the day, which marked the launch of the health insurance exchanges, a big part of Obama's healthcare reform law.

Reflecting the strength in the sector, the Morgan Stanley Healthcare Payor Index and the Morgan Stanley Healthcare Provider Index advanced by 2.2 percent and 1.9 percent, respectively.

Considerable strength was also visible among airline stocks, as reflected by the 2 percent gain posted by the NYSE Arca Airline Index. Republic Airways (RJET) helped lead the sector higher after agreeing to sell Frontier Airlines to an affiliate of Indigo Partners in a deal valued at about $145 million.

Biotechnology, commercial real estate, and internet stocks also saw significant strength on the day, moving higher along with most of the other major sectors.

However, gold stocks bucked the uptrend by the broader markets amid a sharp drop by the price of the precious metal. With gold for December delivery tumbling $40.90 to $1,286.10 an ounce, the NYSE Arca Gold Bugs Index dropped by 2.5 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Tuesday, although the markets in Hong Kong and mainland China were closed for public holidays. Japan's Nikkei 225 Index edged up by 0.2 percent.

Meanwhile, the U.K.'s FTSE 100 Index ended the day roughly flat, while the French CAC 40 Index and the German DAX Index surged up by 1.3 percent and 1.1 percent, respectively.

In the bond market, treasuries moved moderately lower over the course of the session after trending higher in recent weeks. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 3.1 basis points to 2.646 percent.

Looking Ahead

Trading on Wednesday could be impacted by any significant developments in Washington, although traders are also likely to keep an eye on ADP's report on private sector employment.