Closing Bell: Markets Shake Off Washington Shutdown, End Day Higher

Markets React To Government Shutdown
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Despite ongoing rancor in Washington, investors stayed calm Tuesday, sending stocks higher on the first trading day of the final quarter of 2013, as the U.S. government began a partial shutdown.

The Dow Jones industrial average (^DJI) added 62 points, or 0.4 percent, to 15,191, the Standard & Poor's 500 index (^GPSC) edged up 13 points, or 0.8 percent, to 1,695 and the Nasdaq composite index (^IXIC) gained 46 points, or 1.2 percent, to 3,818.

The long-running dispute in Washington over President Barack Obama's health care law led Republican lawmakers to hold the U.S. budget hostage, forcing about 800,000 federal workers off the job and suspending all but essential government services. With the Republican-controlled House of Representatives and Democratic-controlled Senate locked in a stalemate, it was unclear how long it would be before the House and Senate could agree to pass a temporary budget to finance government activities.

Despite the political rancor, investors didn't push the panic button. That suggests that, at least for now, they aren't anticipating that the stalemate will last long enough to cause a serious disruption in the economy and threaten the slow-but-steady U.S. recovery -- or the current four-year bull run in the stock market.

In the latest encouraging news on the economy, a private industry group reported that U.S. manufacturing expanded at the fastest pace since April 2011 last month on stronger production and hiring.

%VIRTUAL-article-sponsoredlinks%But with the closure of federal agencies, the release of a report on construction spending for August, which had been scheduled for 10 a.m, was delayed. If no deal is reached by Friday, the closely watched monthly jobs report will also be delayed.

In commodities news, benchmark oil for November delivery fell 48 cents to $101.85 a barrel, while gold slipped $36.20 or 2.7 percent, to $1,290.30

The tech-heavy Nasdaq was given a boost by Apple (AAPL), which rose $11.25, or 2.4 percent, to $488, after billionaire investor Carl Icahn told CNBC about his dinner meeting with Apple's CEO Tim Cook. Icahn, who said he has invested $2 billion in Apple, is pushing for Apple to spend $150 billion buying its own stock. "I feel very strongly that this should be done," Icahn told CNBC. "It's a no-brainer." (AMZN) shares rose 2.5 percent to $320.56 after a Citigroup (C) analyst said in a research note Tuesday that the company's seasonal hiring plans indicate that the online retailer is expecting a strong holiday season. Amazon said it plans to hire 70,000 full-time seasonal workers in its 45 fulfillment centers in the U.S., a 40 percent increase from its holiday hiring last year.

More Stocks in the News:

  • Merck (MRK) led the Dow higher after saying it would cut 8,500 jobs and move its headquarters to save costs. Merck rose 2.4 percent to $48.75.

  • Ford Motor (F) moved up 1.8 percent to $17.18 after the company reported a 6 percent increase in its September sales. General Motors (GM) dipped 0.2 percent to $35.90 following its sales results.

  • Walgreen (WAG) rose 4.5 percent to $56.23 after the largest U.S. drugstore chain reported that its earnings soared 86 percent.

  • Smith & Wesson Holding (SWHC) said it plans to buy back up to $15 million of its stock and has eliminated its "poison pill" provision. CEO and President James Debney said in a statement that the company believes that investing in itself is presently one of its greatest opportunities. Shares of the Springfield, Mass.-based gunmaker rose 1.6 percent to $11.17 amid a broader market uptick.

  • Citing the shutdown of the U.S. government shutdown, the Justice Department requested a stay of proceedings in its legal fight with US Airways Group (LCC) and American Airlines parent AMR Corp. over the carriers' proposed merger. "Absent an appropriation, the Department of Justice attorneys and employees are generally prohibited from working, even on a voluntary basis," the agency said in a motion.

What to Watch Wednesday:

  • Monsanto (MON) reports third-quarter financial results before U.S. stock markets open.

  • Payroll-processor Automatic Data Processing (ADP) releases its survey of private-sector hiring for September at 8:15 a.m. Eastern time.

  • Federal Reserve Chairman Ben Bernanke speaks in St. Louis at 3 p.m.

-Compiled from staff and wire reports.