Hopes that the partial shutdown of federal government operations will be short-lived led to a stock market rally on Tuesday.
The Dow Jones industrial average gained 62.03 points to 15,191.70. The Nasdaq composite index added 46.50 points to 3,817.98, and the Standard & Poor’s 500 Index rose 13.45 points to 1,695.00.
A private survey of civilian payrolls in September will be released today ahead of the start of trading. The report is important — the Department of Labor said it will not release the official employment report Friday because of the government shutdown. A Commerce Department report on construction spending due Tuesday was not released.
Gold fell sharply Tuesday on concerns any extended cut in federal programs would hurt the economy. The price dropped $40.90 to $1,286.10 an ounce. Oil slipped 29 cents to $102.04 a barrel.
WellPoint Inc. (NYSE: WLP) added 3 percent to pace gains among health care providers as open enrollment for the new exchanges mandated by the Affordable Care Act began Tuesday. Merck & Co. (NYSE: MRK) advanced 2.4 percent after the company announced an overhaul that will eliminate 8,500 workers.
Walgreen Co. (NYSE: WAG) climbed 4.5 percent to $56.24 and profit rose 86 percent after its customer-loyalty card boosted sales. Under Armour Inc. (NYSE: UA) increased 4.1 percent to $82.69 as JPMorgan Chase & Co. (NYSE: JPM) upgraded the maker of workout clothing.
About 6.3 billion shares changed hands on U.S. exchanges, or 9.3 percent more than the three-month average.
The benchmark equity gauge slid 0.6 percent yesterday, bringing its retreat from a Sept. 18 record to 2.6 percent, as lawmakers in Washington failed to agree on a federal budget.
The resulting shutdown will put as many as 800,000 federal employees out of work temporarily and cost the U.S. at least $300 million a day in lost output at first, according to IHS Inc. (NYSE: IHS). That compares with the country’s $15.7 trillion economy.
The standoff may be a buying opportunity for stock investors, if history is any guide. The S&P 500 has risen 11 percent on average in the 12 months after past government shutdowns, according to data compiled by Bloomberg on instances since 1976. That compares with an average return of 9 percent over 12 months.
Congress also faces a dispute over raising the $16.7 trillion debt ceiling this month. The Treasury has said measures to avoid exceeding the borrowing limit will be exhausted Oct. 17.
The United States won’t have enough money to pay all of its bills at some point between Oct. 22 and Oct. 31, according to the Congressional Budget Office.
Failure to increase the limit could lead to a downgrade of the government’s credit rating.
Earnings at S&P 500 companies grew 1.8 percent last quarter, projections compiled by Bloomberg show. Alcoa Inc. (NYSE: AA), Yum! Brands Inc. (NYSE: YUM) and Safeway Inc. (SWY: NYSE) are among the 316 companies in the gauge scheduled to report in October. Analysts’ forecasts show earnings will increase at the fastest pace in two years during the fourth quarter.
WellPoint increased 3 percent to $86.11 and Health Net Inc. (NYSE: HNT) added 3.6 percent to $32.84.
JPMorgan analyst Justin Lake said in a Sept. 18 note that the two companies would be most affected by any delay in the start of open enrollment. UnitedHealth Group Inc. (NYSE: UNH) gained 1.4 percent to $72.58.
Merck climbed 2.4 percent to $48.74 for the steepest climb in the Dow. The second-biggest U.S. drugmaker by sales will cut 8,500 workers and revamp its research and development after seeing new medicines delayed by U.S. regulators.
The positions eliminated are in addition to 7,500 job cuts Merck had already announced, the company said in a statement. The firings now equal about 20 percent of the global workforce.
Ford Motor Co. (NYSE: F) rose 1.9 percent to $17.19, headed for its biggest increase in 3 weeks. The Dearborn, Mich.-based carmaker reported a 5.7 percent rise in U.S. sales of cars and light trucks in September, beating estimates for no change.
— Bloomberg contributed to this report.