After our esteemed leaders in Washington failed to reach a compromise yesterday, the so-called sequester has officially taken effect. Starting today, $85 billion in across-the-board spending cuts are set to take effect, impacting the defense department and other discretionary programs. Yet the market is up, with the Dow Jones Industrial Average (^DJI -0.39%) trading higher by 17 points, or 0.12%, about an hour before the market close. What gives?

As with the boy who cried "wolf" one too many times, fewer and fewer people are paying mind to our politicians' thinly veiled, self-interested shenanigans. As my colleague Travis Hoium noted yesterday:

For more than five years, Wall Street has dealt with brinksmanship in Washington, and the act is getting old. The bank bailout failed until investors panicked and markets plunged. The economy tanked, and even then a stimulus package was like pulling teeth. There was the debt ceiling debate, then the original sequester, the fiscal cliff, and now the actual sequester.

When Washington has actually gotten something done, it has always been a last-minute patch-up, rather than a structural overhaul. So the market has come to expect little more from Washington. As we head toward the sequester, investors have looked past what is or isn't being negotiated between the White House and the houses of Congress, choosing to focus on more important things.

Analysts and investors have chosen instead to focus on the fundamentals today. And those don't look quite so bad compared to the growing embarrassment that is Washington.

Today was a particularly busy day for financial news, with six economic releases published this morning -- click here to see how each report measured up to expectations. On the positive side, January consumer spending and February consumer sentiment rose over the comparable time period. Data from the Department of Commerce showed that Americans increased their spending by 0.2% in the first month of this year compared with December's 0.1% growth. And the University of Michigan index of consumer sentiment came in at 77.6 for February, well above the previous month's 73.8.

On the negative side, both personal incomes and construction spending have taken a turn for the worse. According to the Department of Commerce, consumer income dropped by 3.6% in January; economists had forecast a 2.6% drop. And construction spending declined in January by 2.1%, while analysts had expected 0.7% growth.

Helping to fuel today's rally was upbeat news out of the auto industry. The world's major car-manufacturers released sales figures this morning for the just-concluded month of February. Sales at Ford (F -0.04%) were up 9%, General Motors' (GM -0.34%) were up 7%, and Toyota's (TM 0.92%) were up by just more than 4%. GM's sales were spurred on by its Chevrolet Silverado pickup, which saw demand accelerate by 29%. Ford experienced substantial upticks across the board: Sales of its F-Series pickups rose 15%, sales of Fusions sedans were up 28%, and Escape SUV sales soared 29%. Shares of GM are higher in afternoon trading while Ford and Toyota are nevertheless down.

Finally, in terms of Dow stocks, shares of Bank of America (BAC -0.33%) are leading the blue-chip index higher in afternoon trading, up by 1.9%. Sticking with today's paradoxical theme, the nation's second-largest bank by assets is rallying despite facing a new investigation related to the origination, sale, and servicing of mortgages by the ill-reputed Countrywide Financial, which B of A acquired in 2008.

As my colleague John Grgurich noted:

Maybe nothing will come of this latest crisis-related B of A eruption. Maybe New York's attorney general will find that all of the bank's books are in perfect order. Speaking of New York, if you believe that, I have a bridge you might be interested in buying.

To read more about B of A's legal woes, check out this in-depth series I wrote on the issue.