Oct 1 – The main U.S. stock indexes bounced back from early lows on Wednesday after weaker-than-expected private payrolls data boosted expectations for a central bank rate cut this month, allaying anxiety around the federal government shutdown.
Traders sharply increased bets on a 25-basis-point interest-rate cut from the U.S. Federal Reserve at its next meeting after the ADP National Employment Report showed private payrolls dropped the most in two-and-a-half years in September.
“While the ADP report is a volatile set of data, it may be the only employment data that you have for quite a while,” said Arnim Holzer, global macro strategist at Easterly EAB.
“And today’s relatively negative set of data is probably outside of what the Fed would have liked to have seen.”
At 11:59 a.m. the Dow Jones Industrial Average (.DJI), opens new tab rose 76.92 points, or 0.17%, to 46,474.81, the S&P 500 (.SPX), opens new tab gained 7.49 points, or 0.11%, to 6,695.95, and the Nasdaq Composite (.IXIC), opens new tab added 30.37 points, or 0.13%, to 22,690.38.
The S&P 500 healthcare sector (.SPXHC), opens new tab logged its strongest four-day rally since October 2022. Pfizer (PFE.N), opens new tab, Eli Lilly (LLY.N), opens new tab and Amgen (AMGN.O), opens new tab advanced 5.4%, 6.5%, and 6.5%, respectively, and were among the top performers on the benchmark index.
Pfizer and U.S. President Donald Trump said on Tuesday they had cut a deal in which the drugmaker agreed to lower prescription drug prices in the Medicaid program – compared to its charges in other developed countries – in exchange for tariff relief.
The S&P 500 tech (.SPLRCT), opens new tab sector rose 0.39%. Micron Technology (MU.O), opens new tab and Broadcom (AVGO.O), opens new tab rose 6.7% and 1.9%, respectively, while Apple (AAPL.O), opens new tab edged 0.5% higher. The gains also supported the Nasdaq.
GOVERNMENT SHUTDOWN
After trading lower for most of the premarket session on shutdown concerns, investors soon found their footing.
“The market has become a little bit inured to the shutdown drama,” Holzer said.
Markets have historically been resilient during government shutdowns. The S&P 500 rose during each of the last six, according to a note from Deutsche Bank.
However, other analysts warned that a prolonged shutdown could prove a drag. In the seven instances when such shutdowns lasted 10 days or longer, the S&P 500 fell four times and rose thrice, according to Vanguard.
Data from the Institute for Supply Management showed U.S. manufacturing edged toward recovery in September.
Such readings carry added weight now, with government data such as the nonfarm payrolls report that was scheduled for Friday expected to be delayed.
Investors will also parse commentary from Richmond Fed president Thomas Barkin.
In other stocks, AES (AES.N), opens new tab gained 16.3%, topping the S&P 500 and boosting the S&P 500 utilities sector (.SPLRCU), opens new tab after the Financial Times reported that BlackRock-owned (BLK.N), opens new tab Global Infrastructure Partners was nearing a $38-billion deal to acquire the utility group.
Corteva (CTVA.N), opens new tab said it would separate its seed and pesticide businesses into separate publicly traded companies. It was at the bottom of the S&P 500 after its shares fell 7.4%.
Advancing issues outnumbered decliners by a 1.56-to-1 ratio on the NYSE and by a 1.2-to-1 ratio on the Nasdaq.
The S&P 500 posted 28 new 52-week highs and six new lows, while the Nasdaq Composite recorded 88 new highs and 50 new lows.