Oct 1 (Reuters) - Wall Street's main stock indexes rose on Wednesday, with hearty support from the healthcare sector, despite weaker-than-expected private payrolls data and uncertainty around the first day of the U.S. federal government shutdown.
With the Labor Department's September jobs report expected to be postponed if the government has not reopened by Friday, investors paid 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 were advancing by the afternoon with the biggest gains in the S&P 500 healthcare sector (.SPXHC), up close to 3% with the biggest boost from pharmaceutical companies.
The healthcare sector was on track for its biggest four-day gain since June 2022. On Tuesday, Pfizer (PFE.N), 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 had said that 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 who added that the rally was likely helped by the fact that the sector had underperformed 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.
At 2:34 p.m. the Dow Jones Industrial Average (.DJI), rose 72.53 points, or 0.15%, to 46,470.42, the S&P 500 (.SPX), gained 25.68 points, or 0.38%, to 6,714.12 and the Nasdaq Composite (.IXIC), gained 108.54 points, or 0.48%, to 22,767.45.
Along with healthcare, the S&P 500 tech (.SPLRCT), sector was the benchmark index's next biggest boost. The sector with the biggest percentage decline was materials (.SPLRCM), down 1%.
Castleton noted that equity investors appeared to be shrugging off uncertainties around the shutdown. And 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.
In individual stocks, AES (AES.N), gained more than 15%, boosting the S&P 500 utilities sector (.SPLRCU), after the Financial Times reported that BlackRock-owned (BLK.N), Global Infrastructure Partners was nearing a $38-billion deal to acquire the utility group.
Corteva (CTVA.N), said it would separate its seed and pesticide businesses into separate publicly traded companies, sending its shares down 9%.
Reporting by Sinéad Carew and Stephen Culp in New York, Niket Nishant and Sukriti Gupta in Bengaluru; Editing by Mrigank Dhaniwala, Ros Russell and Pooja Desai and David Gregorio
