Wednesday, October 16, 2013

With Fight Nearing End, Dow Jones Industrials Rally 200 Points

House Speaker John Boehner said today that he won’t fight the Senate’s standoff-ending deal–and investors didn’t fight the stock-market rally.


The S&P 500 gained 1.4% to 1,721.54 today, while the Dow Jones Industrial Average rose 205.82 points, or 1.4%, to 15,373.83.

By agreeing to a deal, Congress has proven what many investors have said all along–it’s all just noise. Osterweis Capital Management John Osterweis and Matt Berler sum up the vibe:

We believe it is important to avoid getting caught up in the drama on Capitol Hill and remain focused on the slow continued healing taking place in the U.S. economy….Once the political dust settles surround the budget and the debt ceiling we think the equity market will resume their upward bias.

Jefferies’ Ward McCarthy and Thomas Simons wonder when economic data will start getting released:

Before the shutdown, BLS officials indicated that the BLS would release a revised data calendar, and that it did not expect to release all of the data at the same time. It is also possible that the data releases on the calendar will not follow the usual order once the data deluge begins…

Our expectation, therefore, is that the employment data will be released two, or possibly three, days after the government shutdown has been completed. The best case scenario is that the House and Senate complete the votes on an un-altered Senate bill tonight, so that at least some government workers are back at the desk in the morning. If BLS employees worked Thursday and Friday, with some work over the weekend, we could get the employment data on Monday.

Consumer stocks got a boost from the deal today, with three among the top-15 gainers in the S&P 500. JC Penney (JCP) rose 4.2% to $7.47, TJX Companies (TJX) jumped 3.8% to $57.72 and Kohl’s (KSS) advanced 3.5% to $53.24

JPMorgan (JPM) gained 3.2% to $54–making it the Dow’s biggest winner–after reaching an agreement with the CFTC over the “London Whale” case. Goldman Sachs (GS) was a close second after rising 2.9% to $162.25 ahead of tomorrow’s earnings.

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