NEW YORK – Investors stayed calm on the first day of a partial shutdown of the U.S. government Tuesday and sent the stock market modestly higher.
A long-running dispute in Washington over President Obama’s health care law caused a deadlock over the U.S. budget, forcing about 800,000 federal workers off the job and suspending all but essential services. With the Republican-controlled House of Representatives and Democratic-controlled Senate locked in a stalemate, it was unclear how long a temporary bill needed to finance government activities would be stalled.
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 cause enough disruption in the economy to threaten a gradual U.S. recovery and a four-year bull run in the stock market.
“The trend of the economy appears to be in a positive direction,” said Michael Sheldon, chief market strategist at RDM Financial Group. “Unless this really gets ugly, we think the markets should start to look ahead to what we believe should be better economic data over the next six to 12 months.”
The Dow Jones industrial average rose 62.03 points, or 0.4 percent, to 15,191.70. The Standard & Poor’s 500 index gained 13.45 points, or 0.8 percent, to 1,695.00. The Nasdaq composite rose 46.50 points, or 1.2 percent, to 3,817.98.
All ten sectors of the S&P 500 rose, led by gains in health care and technology.
Merck helped lift the health care sector. The drugmaker’s stock rose $1.13, or 2.4 percent, to $48.74 after it announced plans to cut another 8,500 jobs as part of a plan to reduce its annual costs by about $2.5 billion by the end of 2015.
The technology sector was given a boost by Apple, which gained $11.21, or 2.4 percent, to $487.90, after billionaire investor Carl Icahn tweeted about his dinner meeting with Apple CEO Tim Cook.
Icahn, who said he has invested $2 billion in Apple, is pushing for the company to spend $150 billion buying its own stock.
The last time the borrowing limit, or debt ceiling, issue came up in August 2011, it led to a downgrade of the United States’ credit rating by Standard & Poor’s. The Dow went through nearly three weeks of triple-digits moves almost daily shortly thereafter.
“To some extent investors are conditioned to a certain amount of drama and if we can get the drama behind us quickly it won’t be a big deal,” said Dean Junkans, chief investment officer for Wells Fargo Private Bank.