Lawmakers allowed the government to partially shut down for the first time in 17 years, but the stock market has barely registered any change.
After some 11th hour legislative back and forth, neither side budged significantly, and the fiscal year began with hundreds of thousands of federal workers going on furlough. IHS Inc says that the shutdown will cost the US economy at least $300 million per day
in lost output and consumer confidence. If the shutdown lasts 21 days, it could cut growth by 0.9% in the quarter.
But the gloom and doom was already priced into the market. Before the opening bell, stock futures were actually higher, rebounding from a three-week low. Dow
(INDEXDJX:.DJI) futures were up 0.19% at 15,074. Futures on the S&P 500
(INDEXSP:.INX) gained 0.23% to 1,678.10 and Nasdaq
(INDEXNASDAQ:.IXIC) futures rose 0.25% to 3,217.00.
A report on August construction spending was expected to show a 0.4% rise, but it the Department of Commerce will have to delay the report due to furloughs. The all-important non-farm payrolls report this Friday might also be put off due to the government shutdown. The privately produced ISM manufacturing index will come out later today. Economists predict that the index will come to 55 in September, a slightly slower level of growth from August's 55.7. (Readings above 50 signify growth in the sector.) Markit's Manufacturing PMI for September is also expected to decline by 0.2 points to 52.9.
European indices also rallied today after economic data releases. Eurozone manufacturing PMI showed a slower increase at 51.1 last month, matching expectations. France moved up 0.1 point to 49.8 and German PMI fell to 51.1. Unemployment throughout the eurozone was flat at 12%.
In corporate news, automakers like General Motors
(NYSE:GM) and Ford
(NYSE:F) could see action as they release September vehicle sales. Total sales are expected to have declined to an annualized rate of 15.5 million from 16.1 million last month.
Merck & Co
(NYSE:MRK) announced plans to fire 8,500 workers, or 20% of its staff, to reduce costs. The company blames delays in regulatory approval for new drugs.
(NYSE:UA) shares rose 0.92% after JPMorgan Chase analysts raised the athletic company stock to neutral from underweight.
The health care exchanges mandated by the Affordable Care Act will open for business today despite the government shutdown.
No positions in stocks mentioned.
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