Dow reclaims 15,000 despite shutdown

Stocks staged a bounce on Wall Street today, even though the shutdown continues to drag on without any apparent change in stance from either side involved in the US budget impasse.

By early afternoon in New York, the Dow Jones had climbed 0.46% or 68.5 points to 15,065, while the broader S&P 500 rose 0.61% to 1689. Of the three major US index benchmarks, the NASDAQ 100 performed the most strongly, gaining 0.78% to 3289.

The shutdown has now lasted for four days and there has been no change of substance in the negotiations to agree funding for the federal government. Although separate issues, the proximity of the upcoming debt-ceiling debate to the budget discussions means that they are effectively becoming lumped together, with the same obstacles impeding resolution to both: essentially the inability of the Republican-led House of Representatives to see eye to eye with the Democrat-dominated Senate. Republican representatives say there has been little discussion of drawing the debt ceiling and the continuing resolution into one bill though.

There have been reports that house speaker John Boehner is determined to avoid a US default on its debt, which has raised hopes that some developments could finally be on their way, but Mr Boehner was later quoted as saying he would not ‘roll over’ and added in a press conference that ‘this isn’t some damn game.’

IMF head Christine Lagarde warned that a failure to raise the debt ceiling in time could damage the global economy and push US GDP growth below 2% for the year.

The shutdown meant that the US labor department did not release its employment situation report today. Atlanta Fed president Dennis Lockhart said that the lack of economic data will make it difficult for the Fed to make a decision on tapering at the October FOMC meeting. ‘Having less data is not helpful in gauging where the economy is and where it's going,’ he said. ‘So it will tend to make me somewhat more cautious.’ While refusing to rule out a reduction in stimulus, he did say that the situation makes it hard to be confident of how the economy is faring.

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