DJIA Up Despite Shutdown and Looming Debt-Ceiling Crisis

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

The government shutdown isn't holding back the Dow Jones Industrial Average (DJINDICES: ^DJI  ) . Despite a dysfunctional Congress, the markets must expect that lawmakers will raise the debt ceiling as the market remains near its all-time highs. As of 1:25 p.m. EDT the Dow is up 0.41%, led by health care stocks. The S&P 500 (SNPINDEX: ^GSPC  ) is up 0.77%.

There were supposed to be 3 U.S. economic releases today, but we got only two, as the government shutdown means some government reports will not be coming out.

Report

Period

Result

Previous

Markit PMI

September

52.8

53.1

ISM PMI

September

56.2%

55.7%

Construction spending

August

Delayed

0.6%

Depending on how long this government shutdown lasts, we may or may not get the September jobs and unemployment rate report on Friday. This gives added importance to the ADP private-sector jobs report, which comes out on Wednesday. The weekly new unemployment claims report should still be released, as it has separate funding from the federal government. If the shutdown lasts longer than a week, next week's unemployment claims report will surely spike higher, with 800,000 federal employees furloughed as of today.

While a government shutdown may change things for purchasing managers going forward, in August at least purchasing managers' sentiment as measured by the Institute for Supply Management hit a two-year high of 56.2%. A reading of more than 50% indicates that the manufacturing sector is expanding, while a result of less than 50% indicates that it is contracting.

Source: Institute For Supply Management.

Markit's PMI also showed the economy to be expanding, but at a slower rate than in August. No matter what both reports show for September, this month's eventual drop will be far more telling given the government shutdown and possible debt default on Oct. 17.

Foolish bottom line
We will no doubt get through this at some point. Life will go on, entrepreneurs will still work to create great companies, and the world will become a better place. That said, in both the public sector and the private sector, governance functions best when stakeholders educate themselves, take an active interest in what's going on, and hold their representatives accountable.

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