US stocks rally as buying opportunity emerges
Stocks on the American exchange posted a strong rally as investors made the most out of a looming government shutdown. Market participants looking to buy low and sell high may have found their opportunity, as the stalemate over government spending threatens to partially shut-down the government for the first time in 17 years.
On Tuesday morning the United States Senate rejected a House spending bill that would curtail President Barrack Obama’s Affordable Care Act. In a straight party-line vote, the Senate voted down the House’s third spending bill in 24 hours. In the afternoon hours of New York trading House Republicans offered another plan to break the stalemate, one that would impose several stopgaps through December 15. According to analysts, this approach would deter the most visible effects of a government shutdown without resolving the larger issue.
The Standard and Poor’s 500 recovered from a three-week low on a gain of 0.8 percent, sending the benchmark index to 1,695.00. The S&P 500 index hit a record high almost two weeks ago following the wrap-up of the September FOMC policy meetings. S&P 500 companies expanded 1.8 percent in the second quarter, due largely to an upbeat earnings season. The Dow Jones Industrial Average advanced 46 points after a triple-digit decline to start the week, closing at 15,191.70. In total, 21 of the Dow’s 30 members registered gains after all but two members declined the previous day.
Pharmaceutical company Merck & Co (NYSE:MRK) advanced more than 2.3 percent after announcing it would lay-off 8,500 workers and revamp its R&D efforts. Dow newcomers Visa (NYSE:V) and Goldman Sachs Group (NYSE:GS) each advanced at least 0.5 percent. The two companies, along with Nike (NYSE:NKE) , ousted Alcoa (NYSE:AA) , Hewlett-Packard (NYSE:HPQ) and Bank of America (NYSE:BAC) from the Dow index last month.
In data news, the Institute of Supple Management reported robust growth in the US manufacturing sector, signalling American factories will play a bigger role in economic recovery in the fourth quarter.
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