Wall Street closes higher, investors shrug off jobs data despite US Government shutdown

Wall Street’s main stock indexes have closed higher, with the biggest boost from the healthcare sector as investors looked past 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 on Wednesday 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 started in earnest on Tuesday after Pfizer and US President Donald Trump said they had cut a deal. The drug maker agreed to lower prescription drug prices in the Medicaid program - compared to its charges in other developed countries - in exchange for tariff relief. Trump said 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.

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

The S&P 500 tech sector provided the second biggest boost for the benchmark index, with Micron rallying 8.9 per cent and the broader Philadelphia chip index adding two per cent.

The sector with the biggest percentage decline during the session was materials, which ended the day down more than one per cent.

The healthcare sector’s biggest gainers were Biogen, up 10.9 per cent and Thermo Fisher, up 9.4 per cent.

Ms Castleton noted that equity investors appeared to be shrugging off uncertainties around the shutdown. 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 16.8 per cent rally in shares of AES made it the biggest gainer in the benchmark index and a strong boost for the S&P 500 utilities sector.

This was after the Financial Times reported that BlackRock-owned Global Infrastructure Partners was nearing a $US38 billion ($57b) deal to acquire the utility group.

While the materials sector was broadly weaker, Lithium Americas Corp US shares rallied 23.3 per cent and rival Albemarle closed up 4.2 per cent. The US Department of Energy has taken a five per cent stake in Lithium Americas and a separate five 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 nine per cent.

Advancing issues outnumbered decliners by a 1.92-to-1 ratio on the NYSE where there were 580 new highs and 99 new lows.

On the Nasdaq, 2,707 stocks rose and 2,003 fell as advancing issues outnumbered decliners by a 1.35-to-1 ratio.

The S&P 500 posted 37 new 52-week highs and 7 new lows while the Nasdaq Composite recorded 111 new highs and 68 new lows.

Volume wise, on US exchanges 19.79 billion shares changed hands compared with the 20-day moving average of 18.62 billion.