Stocks Go Risk-On Despite Washington Turmoil

By Minyanville Staff  OCT 04, 2013 3:57 PM

Today's financial recap and tomorrow's financial outlook.

 


The S&P 500 (INDEXSP:.INX) rose for just the third time in the past 12 days as investors continued to grapple with the impact of the US government shutdown.
Incidentally, the biggest news of the day was the fact that a key piece of news didn't happen. The widely watched monthly non-farm payrolls report from the Bureau of Labor Statistics was not released due to the aforementioned shutdown. Officials have not yet laid out a timetable for the dissemination of the numbers.
 
On the shutdown front, politicians on both sides of the aisle are still engaged in the same game of chicken ahead of the October 17 debt ceiling deadline.

However, Wall Street's general view is that the fight will be resolved soon in order to avoid a market-destroying default of US Treasuries, so there are some players positioning ahead of what seems like an inevitable compromise.
 
In stock news, shares of restaurant chain Potbelly (NASDAQ:PBPB) shot up a whopping 120% to $30.77 from the $14 price at which the IPO was set.
 
Social media names like Facebook (NASDAQ:FB) and Yelp (NASDAQ:YELP) were also in the spotlight after Twitter released its eagerly awaited S-1 IPO filing, which drove bullishness in the sector.
 
We also saw outperformance in the small-cap Russell 2000 (INDEXRUSSELL:RUT), strength in emerging markets bonds and stocks, and weakness in US Treasuries, indicating traders are more than comfortable ahead of what could be a turbulent next few days.
 
Between the constant flow of news coming out of Washington and the unpredictable timing of the jobs report release, we could most definitely see a volatility spike.

Monday's Financial Outlook
 
The official calendar for Monday is very light.
 
At 3:00 p.m. ET, the Federal Reserve will release its August Consumer Credit report. The most recent reading was $10.4 billion.
 
Tower Group (NASDAQ:TWGP) is the sole name reporting earnings on Monday.
 
On the international front, we will get Japan's Trade Balance and Leading Economic Index numbers, as well as the Eurozone Sentix Investor Confidence numbers.
 
However, as stated above, the dominant force in the market is the news flow out of Washington.

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No positions in stocks mentioned.

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