US stocks advanced as investors weighed a partial US government shutdown and as manufacturing in the world's biggest economy grew more than expected.
Investors appeared to shrug off news of the first government shutdown in 17 years after Congress failed to meet its Monday midnight deadline for passing the budget bill.
The shutdown will potentially put up to one million workers on unpaid leave, close national parks and halt some services.
Congress was unable to break a political stalemate as they continued to disagree over President Barack Obama's signature healthcare reform.
House Republicans floated a late offer to break the impasse but Democrats rejected the idea.
The closure of the government will cost the US at least $300m a day in lost economic output at the start, according to IHS Inc..
However, ETX Capital Market Strategist Ishaq Siddiqi said "investors are not fretting" as demonstrated by the upward movement of stocks today.
He said the positive reaction may come from the likehood that the Federal Reserve will push back a decision to start scaling back its $85bn per month in bond purchases.
"See, even though economic growth may get a knocking on the back of this, for markets addicted to the Federal Reserve's liquidity programme, quantitative easing, this shutdown has just bought risk-junkie investors some precious time to enjoy the current mammoth of easy Fed cash still floating around in the global money markets," he said.
"The Fed intended to taper quantitative easing, announcing their exit strategy during the summer of 2013, gearing the market up for a withdrawal only to not executing it last month when investors were almost convinced tapering was on the cards."
The shutdown meant that this afternoon´s construction spending data was not released.
If the closure continues until the end of the week then the non-farm payrolls report may not be published either.
One report that made it to publication, however, was the Institute for Supply Management's manufacturing sector purchasing managers´ index for September. The index rose to 56.2, the strongest since April 2011, from 55.7 a month earlier.
Economists had predicted a reading of 55. A reading above 50 signals expansion.
Merck to lay-off thousands
In company news, pharmaceutical giant Merck, the second-biggest US drugmaker by sales, rose after saying it will fire 8,500 workers following the delay of new medicines by US regulators.
Walgreen gained after the US drugstore retailer said fiscal fourth-quarter profit climbed to $657m in the quarter ended August 31st from $353m.
H&R Block Inc. jumped after Morgan Stanley raised its recommendation on the shares
Crude futures off
Ten-year US Treasury yields were up 2 basis points to 2.63%.
Front month West Texas crude futures were down by $0.967 to the $101.350 per barrel on the NYMEX.