NEW YORK (AP) — Investors stayed calm on the first day of a partial shutdown of the U.S. government Tuesday 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 locked in a stalemate, it was unclear how long a temporary bill needed to finance government activities would be stalled.
Despite the political rancor, investors didn't push the panic button. That suggests that, at least for now, they aren't anticipating that the stalemate will 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 Tuesday that U.S. manufacturing expanded at the fastest pace since April 2011 last month on stronger production and hiring.
The Dow Jones industrial average rose 62.03 points, or 0.4 percent, to 15,191.70. The Standard & Poor's 500 index gained 13.45 points, or 0.8 percent, to 1,695.00. The Nasdaq composite rose 46.50 points, or 1.2 percent, to 3,817.98.
All ten sectors of the S&P 500 rose, led by gains in health care and technology.
Merck helped lift the health care sector. The drugmaker's stock rose $1.13, or 2.4 percent, to $48.74 after it announced 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.
The technology sector was given a boost by Apple, which gained $11.21, or 2.4 percent, to $487.90, after billionaire investor Carl Icahn tweeted about his dinner meeting with Apple's CEO Tim Cook. Icahn, who said he has invested $2 billion in Apple, is pushing for the company to spend $150 billion buying its own stock.
"I feel very strongly that this should be done," Icahn told CNBC in an interview. "It's a no-brainer."
The Apple board pledged in April to spend $60 billion buying back its stock through the end of 2015. About $18 billion of that commitment had been exhausted through June.
The S&P 500 index has fallen 2 percent since climbing to a record on Sept. 18, when the Federal Reserve surprised investors by saying it would continue with its economic stimulus. The index has fallen seven out of eight days leading up to the partial government shutdown.