WASHINGTON (dpa-AFX) - Stocks came under pressure early in the session on Wednesday but staged a significant turnaround over the course of the trading day. The major averages climbed well off their lows of the session and into positive territory.
The major averages gave back some ground going into the end the day still finished higher, The Nasdaq climbed 95.15 points or 0.4 percent to 22,755.16, the S&P 500 rose 22.74 points or 0.3 percent to 6,711.20 and the Dow inched up 43.21 points or 0.1 percent to 46,441.10.
Due to the turnaround on the day, the major averages closed higher for the fourth straight session, with the Dow and the S&P 500 reaching new record closing highs.
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 turnaround also came as analysts have pointed out that the markets have historically not been materially impacted by government shutdowns.
'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 extended the rally seen over the course of the previous session, driving the NYSE Arca Pharmaceutical Index up by 5.4 percent to its best closing level in almost seven months.
Considerable strength also emerged among computer hardware stocks, with the NYSE Arca Computer Hardware Index spiking by 3.9 percent to a record closing high.
The NYSE Arca Biotechnology Index also surged by 3.2 percent to a record closing high amid substantial strength among biotech stocks.
Healthcare, semiconductor and steel stocks also turned in strong performances on the day, while airline and financial stocks showed significant moves 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 all moved to the upside on the day. While the French CAC 40 Index advanced by 0.9 percent, the German DAX Index and the French CAC 40 Index both jumped by 1.0 percent.
In the bond market, treasuries moved higher in reaction to government shutdown and the private sector jobs data. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slid 4.2 basis points to 4.106 percent.
Looking Ahead
Reports on weekly jobless claims and factory orders were scheduled to be released on Thursday, but the data is likely to be delayed due to the government shutdown.
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