FILE - In this Wednesday, Sept. 18, 2013, file photo, specialist Christopher Culhane works at his post on the floor of the New York Stock Exchange after the Federal Reserve announcement. Traders are shrugging off the partial shutdown of U.S. government operations on Tuesday, Oct. 1, 2013, sending stock futures higher. (AP Photo/Richard Drew)
NEW YORK — Investors stayed calm on the first day of a partial shutdown of the U.S. government today and sent the stock market modestly higher.
A long-running dispute in Washington over President Barack Obama’s health care law caused a deadlock over the U.S. budget, forcing about 800,000 federal workers off the job and suspending all but essential services. With the Republican-controlled House of Representatives and Democratic-controlled Senate at a stalemate, it was unclear how long a temporary bill needed to finance government activities would be stalled.
Despite the political wrangling, investors didn’t push the panic button. That suggests that, at least for now, they aren’t anticipating that the stalemate would cause enough disruption in the economy to threaten a gradual U.S. recovery and a four-year bull run in the stock market.
“The trend of the economy appears to be in a positive direction,” said Michael Sheldon, chief market strategist at RDM Financial Group. “Unless this really gets ugly, we think the markets should start to look ahead to what we believe should be better economic data over the next six to 12 months.”
In the latest encouraging news on the economy, a private industry group reported today that U.S. manufacturing expanded at the fastest pace since April 2011 last month on stronger production and hiring.
The Dow Jones industrial average was up 62 points, or 0.4 percent, to 15,191 as of 12:42 p.m. The S&P 500 index gained 13 points, or 0.8 percent, to 1,694. The Nasdaq composite rose 39 points, or 1.1 percent, to 3,805.
The gains were led by health care and technology stocks.
Tech stocks were given a boost by Apple. The company’s stock rose $10.87, or 2.3 percent, after billionaire investor Carl Icahn told CNBC about his dinner meeting with Apple’s CEO Tim Cook. Icahn, who said he has invested $2 billion in the stock, is pushing for Apple to spend $150 billion buying back its own stock.
“I feel very strongly that this should be done,” Icahn told CNBC. “It’s a no-brainer.”
The Standard & Poor’s 500 index climbed to a record Sept. 18 after the Federal Reserve surprised investors and said that it would continue with its economic stimulus. The index has shed 2 percent since then, falling on seven out of eight days before the shutdown.
“We’re not jumping in with both feet but we’re selectively putting money to work,” said Joseph Quinlan, chief market strategist for U.S. Trust Bank of America Private Wealth Management. “On the other side of the government shutdown, you’ve got continued support from the Fed and a global economy that’s rebounding.”
Many investors still don’t foresee the budget fight spilling over into a dispute about raising the nation’s borrowing limit. Treasury Secretary Jack Lew said last week that the government would run out of borrowing authority by roughly Oct. 17.
The last time the borrowing limit issue came up in August 2011, it led to Standard & Poor’s downgrading the United States’ credit rating. The Dow went through nearly three weeks of triple-digits moves almost daily.
In government bond trading, the yield on the 10-year note rose to 2.65 percent from 2.61 percent late Monday.
The price of oil fell $1, or 1 percent, to $101.32 a barrel. Gold fell $39, or 3 percent, to $1,287 an ounce.
The dollar fell against the euro and the Japanese yen.
Among stocks making big moves:
— Merck rose $1.09, or 2.2 percent, to $48.67 after the drugmaker said it plans to cut another 8,500 jobs as part of a plan to reduce its annual costs by about $2.5 billion by the end of 2015.
— Walgreen rose $2.46, or 4.6 percent, to $56.30 after the drugstore chain said its fiscal fourth-quarter earnings soared 86 percent after it booked gains from its method of inventory accounting and its acquisition of a stake in European health and beauty retailer Alliance Boots.
— Ford rose 38 cents, or 2.2 percent, to $17.25 after the automaker said that U.S. sales rose 6 percent in September, with strong car sales making up for slower sales of SUVs.