Stocks finished in the green after better-than-expected manufacturing numbers eclipsed investor worries about the first government shutdown in seventeen years. Markets began the first trading day of a fresh month as well as a new quarter on a positive note, after hitting multi-week lows. Due to the government shutdown, the construction spending report which was scheduled to be released yesterday was cancelled. The nonfarm payroll report will also not be released on Friday. All ten sectors of the S&P 500 industry groups finished in the green, led by the technology and financial sectors.
For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street
The Dow Jones Industrial Average (DJI) gained 0.4% to close the day at 15191.70 The S&P 500 added 0.8% to finish yesterday’s trading session at 1695.00. The tech-laden Nasdaq Composite Index increased 1.2% to end at 3817.98. The fear-gauge CBOE Volatility Index (VIX) declined 6.4% to settle at 15.54. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 6.0 billion shares, lower than 2013’s average of 6.3 billion shares. Advancing stocks outnumbered the decliners. For 69% shares that advanced, only 27% declined.
Democrats and Republicans failed to strike a deal on the spending bill before October 1 deadline. This resulted in government shutdown leaving roughly 800,000 employees out of work. The House of Representatives demanded that some part of President Obama’s healthcare insurance proposals be delayed. This was rejected by the Senate a couple of times. President Barack Obama blamed the House of Representatives Tea Party members for the current situation.
Investor apprehensions about a potential government shutdown have pushed the markets lower in recent days. But yesterday benchmarks rebounded from multi-week lows as investors believe that the problem will be solved soon. But according to analysts, investor worries about a government shutdown will increase if the situation lasts for more than a week as a battle over the federal debt ceiling is also on the cards.
On the home front, the institute of supply management released its report on the manufacturing sector. According to the report, manufacturing activity increased at its fastest pace in more than two years. ISM manufacturing index increased to 56.2 in September from August’s figure of 55.7. This was well above the consensus estimate of 55.1. The new orders index declined 2.5% to 60.5 while the production index gained 0.2% to 62.6. Employment index increased 2.1% to 55.4 from August's reading of 53.3.On the earnings front, Walgreen Company (NYSE:WAG) reported fourth quarter results. The company’s earnings came in above the Street’s estimates. Walgreen same-store sales increased 4.6%. The company earned 69 cents a share in comparison to 39 cents per share in the year ago period. Walgreen fourth quarter earnings were boosted by robust sales of higher-margin generic drugs. The company’s shares jumped nearly 5.0% after results were announced.
The healthcare sector was the biggest gainer among the S&P 500 industry groups and the Health Care SPDR (XLV) gained 1.4%. Stocks such as Johnson & Johnson (NYSE:JNJ), Merck & Co., Inc. (NYSE:MRK), Bristol-Myers Squibb Co (NYSE:BMY), Eli Lilly & Co. (NYSE:LLY) and Pfizer Inc. (NYSE:PFE) added 0.9%, 2.4%, 2.1%, 0.7% and 0.6%, respectively.
Technology sector also had a good run yesterday led by Apple Inc. (NASDAQ:AAPL) following news that Carl Icahn met Tim Cook for dinner. Icahn said he "pushed hard" for a $150 billion buyback. The Technology SPDR (XLK) gained 0.9%. Stocks such as Apple, Microsoft Corporation (NASDAQ:MSFT), Google Inc (NASDAQ:GOOG), Yahoo! Inc. (NASDAQ:YHOO) and Oracle Corporation (NYSE:ORCL) gained 2.4%, 0.9%, 1.3%, 3.4% and 1.0%, respectively.