NEW YORK (MarketWatch) — U.S. stock futures gained Tuesday as investors, at least for the moment, chose to shrug off a partial government shutdown that kicked in as a deadline passed without a deal.
Stock futures retained mild gains after the final reading of Markit’s U.S. manufacturing purchasing managers’ index for September remained unchanged at 52.8, down from 53.1 the month before.
Republicans and Democrats in Congress failed to agree on funding for the fiscal year that began just after midnight, with House Republicans insisting on tying a spending bill to changes to the new federal health-care law — a demand rejected by Senate Democrats. A shutdown — the first in 17 years — has begun, furloughing thousands of government workers in the process.Futures for the Dow industrials DJZ3 +0.11%rose 15 points, or 0.1%, to 15,061. Futures for the Standard & Poor’s 500 indexSPZ3 +0.16% gained 2.4 points, or 0.1%, to 1,676.70. Futures for the Nasdaq 100 index NDZ3 +0.30% rose 6.75 points, or 0.2%, to 3,215.75.
Given the increased uncertainty created by the budget impasse, and with the government needing to raise the debt ceiling by Oct. 17, there are higher risks of further declines in equities, said Allen von Mehren, chief analyst at Danske Bank in a note.
“The reaction so far has been fairly muted. But given that markets have been technically overbought, we think it’s likely we will see further declines in coming weeks,” said von Mehren. “This should also add to downside pressure on bond yields. In the short term, the risk is also that the U.S. dollar could weaken further.”
The shutdown means September’s monthly jobs report won’t be released on Friday. However, markets are bracing for the possibility that the data could be released as early as Tuesday. Economists polled by MarketWatch expect payrolls to rise to 185,000 in September from 169,000 in August.
Reuters
On the regular schedule, the Institute for Supply Management’s business survey is projected to drop to 55% in September from a more than two-year high of 55.7% in August. A number above 50% signals growth. The report will be released at 10 a.m. Eastern.
A report on construction spending for August will be postponed due to the shutdown.
Diamond Foods Inc. DMND -11.38% shares fell 7.2% after the company waxed negative for the first quarter despite posting strong fourth-quarter results.
Watch Merck, Walgreen, Diamond Foods
General Motors Co. GM -0.11% and Ford Motor Co. F +2.31% could be active as major car makers are scheduled to release monthly sales data. Analysts are predicting car sales could fall in September versus the year-ago period.Read GM, Ford are Tuesday’s stocks to watch
Walgreen Co. WAG +4.52% shares rose 0.6% after the drugstore chain reported fourth-quarter profit jumped to 69 cents a share from 39 cents a year ago. It also posted a same-store sales gain of 4.6% in the fourth quarter and revenue of $17.9 billion.
The dollar was under pressure, while oil prices also fell and gold turned lower.
Asia stocks showed little reaction to the looming shutdown, with Japanese shares eking out a small gain after Prime Minister Shinzo Abe said he would raise the country’s sales tax next year. Europe stocks logged gains, with data showing the euro-zone manufacturing sector expanded for a third month in September. The final reading came in unchanged from a preliminary reading.
Wall Street stocks dropped on Monday, with the Dow industrials DJIA +0.48% logging a triple-digit decline.
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