WASHINGTON (dpa-AFX) - After coming under pressure early in the session, stocks have regained ground over the course of the trading day on Thursday. The major averages have climbed well off their early lows and are now lingering near the unchanged line.
Currently, the major averages are narrowly mixed. While the Dow is up 26.05 points or 0.1 percent at 46,423.94, the S&P 500 is down 3.56 points or 0.1 percent at 6,684.90 and the Nasdaq is down 21.32 points or 0.1 percent at 22,638.69.
The initial pullback came after the U.S. government officially shut down early this morning after lawmakers failed to pass a temporary spending bill.
Democrats have demanded that any stop-gap funding bill include an extension of enhanced Obamacare tax credits, while Republicans have argued the issue should be debated after a funding bill is passed.
However, the early selling pressure may have been offset by optimism about the outlook for interest rates following the release of private sector employment data.
While the release of the Labor Department's closely watched monthly jobs on Friday is likely to be delayed due to the shutdown, payroll processor ADP released a report this morning showing an unexpected decrease by private sector employment in the month of September.
ADP said private sector employment fell by 32,000 jobs in September after dipping by a revised 3,000 jobs in August.
Economists had expected private sector employment to climb by 50,000 jobs compared to the addition of 54,000 jobs originally reported for the previous month.
Bill Adams, Chief Economist for Comerica Bank, noted the ADP report could have outsize influence on the Federal Reserve's next interest rate decision if the shutdown lasts long enough to keep the Fed from seeing the September jobs report before their next meeting later this month.
The subsequent recovery attempt also comes as analysts have pointed out that markets have historically not been materially impacted by a government shutdown.
'On average, the S&P 500 has historically been about flat during shutdowns, with a slightly higher probability of gains vs. losses since 1976,' said Jeff Buchbinder, Chief Equity Strategist for LPL Financial.
He added, 'Considering that most of the losses came during the late 1970s, and the biggest decline during a shutdown since 1980 was 2.2%, history suggests stocks have a good chance of going higher during this shutdown, though past performance does not guarantee future results.'
Sector News
Pharmaceutical are extending the rally seen over the course of the previous session, with the NYSE Arca Pharmaceutical Index spiking by 3.8 percent to its best intraday level in over six months.
Substantial strength is also visible among biotechnology stocks, as reflected by the 2.7 percent surge by the NYSE Arca Biotechnology Index. With the jump, the index has reached a record intraday high.
Computer hardware, gold and healthcare stocks are also seeing considerable strength, while brokerage stocks have shown a significant move to the downside.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Wednesday, with markets in Hong Kong and mainland China closed for holidays. Japan's Nikkei 225 Index slid by 0.9 percent, while South Korea's Kospi advanced by 0.9 percent.
Meanwhile, the major European markets have all moved to the upside on the day. While the German DAX Index is up by 0.8 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index are both up by 0.9 percent.
In the bond market, treasuries have moved higher in reaction to the private sector jobs data. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 4.0 basis points at 4.110 percent.
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