US: Wall Street closes higher as investors shrug off jobs data, US shutdown

[NEW YORK] Wall Street’s main stock indexes rose on Wednesday (Oct 1), with strong support from the healthcare sector, despite weaker-than-expected private payrolls data and uncertainty around the first day of the US federal government shutdown.

With the Labor Department’s September jobs report expected to be postponed if the government has not reopened by Friday, investors were paying close attention to the ADP National Employment Report.

ADP showed a decline in private payrolls of 32,000 and a downwardly revised 3,000 decline in August. These numbers were weaker than economist forecasts for growth of 50,000 in September and the prior report of a 54,000 advance in August.

Elsewhere in economic data, the Institute for Supply Management showed US manufacturing edged towards recovery in September.

After opening lower, all three main US indexes advanced. Among the S&P 500’s 11 major industry sectors, the biggest gainer was S&P 500 healthcare, boosted by pharmaceutical companies.

The healthcare rally had started in earnest on Tuesday after Pfizer and US President Donald Trump said that they had cut a deal. The drugmaker agreed to lower prescription drug prices in the Medicaid programme, compared to its charges in other developed countries, in exchange for tariff relief. Trump said that he expected more drug companies to follow suit.

“Yesterday was the catalyst for healthcare,” said Lara Castleton, US head of portfolio construction and strategy at Janus Henderson Investors, adding that the sector was probably ripe for a rally after underperforming the rest of the market so far this year.

“People have not necessarily been avoiding it, but they have not been as heavily allocated into healthcare as they have been in technology and all the AI hype,” she said.

According to preliminary data, the S&P 500 gained 22.74 points, or 0.34 per cent, to end at 6,711.20 points, while the Nasdaq Composite gained 95.15 points, or 0.42 per cent, to 22,755.16. The Dow Jones Industrial Average rose 43.21 points, or 0.09 per cent, to 46,441.10.

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The S&P 500 tech sector provided another big boost for the benchmark index. The sector with the biggest percentage decline during the session was materials.

Castleton noted that equity investors appeared to be shrugging off uncertainties around the shutdown. And markets have historically been resilient during government closures. The S&P 500 rose during each of the last six shutdowns, according to a note from Deutsche Bank. During the last government closure between the end of 2018 and the beginning of 2019, indexes were able to advance.

In individual stocks, a strong rally in shares of AES boosted the S&P 500 utilities sector after the Financial Times reported that BlackRock-owned Global Infrastructure Partners was nearing a US$38-billion deal to acquire the utility group.

While the materials sector was broadly weaker, Lithium Americas Corp US shares rallied sharply and rival Albemarle also rose after the US Department of Energy has taken a 5 per cent stake in Lithium Americas and a separate 5 per cent stake in the company’s joint venture with General Motors .

Corteva said it would separate its seed and pesticide businesses into separate publicly traded companies, sending its shares down sharply. REUTERS