Wall Street’s main stock indexes closed higher on Wednesday, with the biggest boost from the health-care sector, as investors looked past weaker-than-expected private payrolls data and uncertainty around the first day of the U.S. federal government shutdown.
Canada’s main stock indexes also gained and closed at another record high, thanks in part to gold’s continued rally.
With the Labor Department’s September jobs report in the U.S. expected to be postponed if the government has not reopened by Friday, investors were 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 U.S. manufacturing edged toward recovery in September.
After opening lower, all three main U.S. indexes advanced. Among the S&P 500’s 11 major industry sectors, the biggest gainer was S&P 500 health care, boosted by pharmaceutical companies. The health-care rally started in earnest on Tuesday after Pfizer and U.S. President Donald Trump said they had cut a deal. The drugmaker 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, U.S. 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.
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.
The Dow Jones Industrial Average rose 43.21 points, or 0.09%, to 46,441.10, the S&P 500 gained 22.74 points, or 0.34%, to a record high 6,711.20 and the Nasdaq Composite gained 95.15 points, or 0.42%, to 22,755.16.
The S&P/TSX composite index ended up 84.86 points, or 0.3%, at 30,107.67, surpassing Tuesday’s record closing high.
“We are not surprised to see members of the TSX index continue to perform well,” said Sid Mokhtari, chief market technician for CIBC Capital Markets. “Our breadth is good, we’ve seen our dollar being on the weaker side, which is inversely correlated to the performance of the nation’s benchmark index, and we’re resource-oriented.”
Canada is a major producer of commodities such as oil and gold that are priced in U.S. dollars.
The Canadian dollar weakened against its U.S. counterpart as a steeper slowdown in Canada’s manufacturing sector supported bets for additional interest rate cuts by the Bank of Canada. The loonie in afternoon trading was 0.2% lower at 1.3945 per U.S. dollar, or 71.71 U.S. cents. On Friday, the currency touched a four-month low at 1.3958, its weakest level since May 20.
The materials sector, which includes metal mining shares, gained 0.9% as gold extended its record-setting run. A U.S. government shutdown added to gold’s safe-haven appeal, together with the softer U.S. jobs data that reinforced expectations the Federal Reserve will cut interest rates further this month.
Technology was up 0.9% in Toronto, with shares of electronic equipment company Celestica Inc gaining 2.5%.
Three of the TSX’s 10 main sectors ended lower, including energy. It lost 0.2% as the price of oil settled nearly 1% lower at US$61.78 a barrel.
In corporate news, the U.S. Department of Energy has taken a 5% stake in Vancouver-based Lithium Americas and a separate 5% stake in the company’s Thacker Pass joint venture with General Motors that is set to be the largest lithium source in the Western Hemisphere. Shares of Lithium Americas jumped 23.4%.
After health care, the S&P 500 tech sector provided the second biggest boost for the benchmark index, with Micron rallying 8.9% and the broader Philadelphia chip index adding 2%.
The U.S. sector with the biggest percentage decline during the session was materials, which ended the day down more than 1%.
The health-care sector’s biggest gainers were Biogen, up 10.9% and Thermo Fisher, up 9.4%.
In individual U.S. stocks, a 16.8% 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 US$38-billion deal to acquire the utility group.
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 U.S. exchanges 19.79 billion shares changed hands compared with the 20-day moving average of 18.62 billion.
Reuters, Globe staff