MARKET SNAPSHOT: S&P 500, Nasdaq Hit Records As Stocks Shake Off Shutdown Worries
Strategist: 'History says that investors have little to fear from government shutdowns'
U.S. stock-market indexes shook off concerns about a partial government shutdown that entered its third day Monday, with the S&P 500 and Nasdaq hitting intraday records.
Strategists note that shutdowns have previously weighed on the stock market in the short-term, but that they don't tend to bring about heavy selling or have lasting consequences for performance.
What are the main benchmarks doing?
The S&P 500 rose 6 points, or 0.2%, to 2,816 with eight of its 11 main sectors trading slightly higher. Telecoms, utilities and energy shares were sharply higher, leading the gains. Materials and industrials were in negative territory, down about 0.6%.
The Nasdaq Composite Index was up 31 points, or 0.4%, at 7,367. Earlier the technology-laden index touched an intraday record at 7,375.01, thanks to a jump in biotechnology stocks. The iShares Nasdaq Biotechnology ETF (IBB) was up 2.3% fueled by a flurry of merger news in the industry (http://www.marketwatch.com/story/biotech-etf-rallies-on-merger-news-on-track-for-highest-close-since-2015-2018-01-22).
The Dow Jones Industrial Average meanwhile, was flat at 26,071.
The three gauges have gained between 24% and 33% over the past 12 months, helped by an expanding U.S. economy, growth in corporate profits and enthusiasm over tax cuts for companies (http://www.marketwatch.com/story/stock-market-investors-eager-for-more-guidance-on-tax-cut-impact-2018-01-20).
What are strategists saying?
"Investors have learned from history that shutdowns don't impact markets, so it's not surprising to see stock prices higher," said Kristina Hooper, chief global market strategist at Invesco.
"The biggest geopolitical risk to markets in the long term is trade-protectionist policies. In the short-term, the wrangling over the debt ceiling is likely to spook investors a lot more than shutdown does because the impact on markets is direct," Hooper said.
"History says that investors have little to fear from government shutdowns, as four of the seven in the past 35 years were accompanied by price declines that averaged only 1.0% and required less than two weeks to get back to break even," said Sam Stovall, CFRA's chief investment strategist, in a note late Sunday.
"We think this shutdown will also be a nonevent," Stovall added.
See:This is what happens in the stock market when the government shuts down (http://www.marketwatch.com/story/heres-how-the-stock-market-has-handled-past-government-shutdowns-2018-01-16)
And read:A shutdown 'could reintroduce investors to the fact that markets go down' (http://www.marketwatch.com/story/a-government-shutdown-could-reintroduce-investors-to-the-fact-that-markets-go-down-2018-01-22)
What's driving markets?
Lawmakers failed Sunday to end the federal government shutdown, as negotiations over immigration continued to roil Capitol Hill.
The Senate was expected to hold a procedural vote (http://www.marketwatch.com/story/compromise-seems-far-off-on-second-day-of-government-shutdown-2018-01-21) at noon Eastern Time on a measure that would keep the government funded through Feb. 8, but it wasn't clear if it would have enough support to advance.
Read:Traders lack 'an appetite to take action' as shutdown runs on--analysts react to impasse (http://www.marketwatch.com/story/traders-lack-an-appetite-to-take-action-as-shutdown-runs-on-analysts-react-to-impasse-2018-01-22)
Economic reports could be overshadowed or even delayed this week by the shutdown. On Monday, a reading on the Chicago Federal Reserve's national activity index rose to 0.27 in December from 0.11 in November.
Check out:GDP report could fall victim to government shutdown (http://www.marketwatch.com/story/gdp-report-could-fall-victim-to-government-shutdown-2018-01-19)
Also see:MarketWatch's Economic Calendar (http://www.marketwatch.com/economy-politics/calendars/economic)
Which stocks look like key movers?
Apple Inc.'s stock (AAPL) traded 0.4% lower amid fresh concerns about iPhone X sales, with the worries weighing on the Silicon Valley giant's suppliers in Asia (http://www.marketwatch.com/story/asian-markets-unfazed-by-us-government-shutdown-2018-01-21).
Buyout news was lifting biotech stocks Juno Therapeutics Inc.(JUNO)and Bioverativ Inc.(BIVV) by 27% and 63%, respectively.
Celgene Corp.(CELG)said it plans to buy Juno for $9 billion (http://www.marketwatch.com/story/celgene-to-acquire-juno-therapeutics-for-9-billion-or-87-a-share-2018-01-22), and Sanofi SA(SAN.FR)(SAN.FR)said it would acquire Bioverativ for $12 billion (http://www.marketwatch.com/story/sanofi-to-acquire-bioverativ-for-116-billion-2018-01-22-24852329). Celgene shares fell 1.7%, while Sanofi shares dropped 4.1%.
In other deal news, BioCryst Pharmaceuticals(BCRX) and Idera Pharmaceuticals(IDRA) agreed to merge. BioCryst shares added 2.3%, while Idera sank 6.7%.
Insurance company Validus Holding Ltd.'s shares (VR) soared 44% after giant insurer American International Group Inc.(AIG)announced it is buying Validus for about $6 billion (http://www.marketwatch.com/story/aig-to-acquire-validus-for-556-billion-2018-01-22). AIG shares were down 1.2%.
Shares in Halliburton Co.(HAL)traded 2.6% higher after the oil-field services provider released better-than-expected quarterly results (http://www.marketwatch.com/story/halliburton-shares-rise-after-q4-profit-revenue-beats-2018-01-22).
Shares of Xerox Corp (XRX) rose 1.5% after The Wall Street Journal reported that the company's biggest and third-biggest investors, billionaires Carl Icahn and Darwin Deason, have formed an alliance and plan to encourage the printer and copier giant to explore a potential sale.
Streaming-video pioneer Netflix Inc.(NFLX)is due to report after the close. Shares of the company were up 1.8%.
See:Netflix earnings--did price increases send customers packing? (http://www.marketwatch.com/story/netflix-earnings-analysts-await-update-on-how-price-increases-are-affecting-growth-2018-01-17)
And read:As stocks rocket to records, Ameritrade to roll out round-the-clock trade (http://www.marketwatch.com/story/as-stock-market-rockets-to-records-td-ameritrade-to-roll-out-round-the-clock-trade-2018-01-22)
What are other assets doing?
The ICE U.S. Dollar Index (http://www.marketwatch.com/story/dollar-holds-steady-as-investors-wait-for-shutdown-developments-2018-01-22)was modestly lower as traders waited for developments on the shutdown. European stocks (http://www.marketwatch.com/story/european-stocks-wobble-around-2-12-year-high-as-ubs-falls-washington-wrestles-2018-01-22)were trading slightly higher, and Asian markets closed mostly higher (http://www.marketwatch.com/story/asian-markets-unfazed-by-us-government-shutdown-2018-01-21). Gold futures and oil futures (http://www.marketwatch.com/story/oil-prices-edge-up-after-saudi-urges-producers-to-cooperate-into-2019-2018-01-22)were little changed.
Don't miss:H&M's stock has been cut in half over 3 years--here's how to play the retailer (http://www.marketwatch.com/story/hms-stock-has-been-cut-in-half-over-3-years-heres-how-to-play-the-retailer-2018-01-20)
(END) Dow Jones Newswires
January 22, 2018 11:57 ET (16:57 GMT)