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 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 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 was up 62 points, or 0.4 percent, to 15,191 as of 12:42 p.m. (1642 GMT). 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." (continued...)
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