This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
See Cramer's multi-million dollar portfolio for FREE and get his new book Get Rich Carefully! Learn More

Bank Stocks Rise as Investors Shrug: Government Shutdown Winners

NEW YORK (TheStreet) -- New York Community Bancorp (NYCB) was the winner on Tuesday among stocks of large U.S. banks, with shares rising over 2.5% to close at 15.48.

The broad indices showed plenty of strength after the federal government shutdown at midnight, owing to the inability of the House of Representatives and the Senate to agree on a budget to send to President Obama. The Dow Jones Industrial Average ended with a gain of 0.4, while the S&P 500 (SPX.X) was up 0.8% and the NASDAQ Composite rose 1.2%.

Bank stocks fared quite well, with the KBW Bank Index (I:BKX) rising 0.7% to 62.68, with all 24 index components showing gains.

Investors shrugged off the latest game of budget brinksmanship in Washington, and discounted the possibility of a default by the government in mid-October, as the market yield on 10-year Treasury bonds was up only three basis points to 2.65%. U.S. Treasury Secretary Jack Lew in a letter to Speaker of the House John Boehner (R., Ohio) last Wednesday said the "extraordinary measures" the Treasury was taking to maintain its borrowing power will "be exhausted no later than Oct. 17," unless the $16.7 trillion federal debt limit is raised.

With the budget deadline having passed, hundreds of thousands of federal workers will be furloughed, although critical government services, including Social Security, air traffic control and the U.S. Post Office will continue to function. Still, the government shutdown can have quite an effect on the economic recovery. Deutsche Bank market strategist David Bianco in a note to clients on Sunday wrote that "Perhaps 0.02% of GDP is threatened every day the government is shut, likely less the shorter the closure and more the longer." That is, of course, a small daily figure, but with the U.S. economy growing at an annual rate of 2.5% according to the latest Bureau of Economic Analysis estimate, the shutdown could even affect Federal Reserve stimulus policy.

The good news for investors on Tuesday was a report from the Institute for Supply Management that its Purchasing Managers Index (PMI) for September increased to 56.2% from 55.7% in August, coming in ahead of the consensus estimate of 55, among economists polled by Thomson Reuters. The ISM said "Economic activity in the manufacturing sector expanded in September for the fourth consecutive month, and the overall economy grew for the 52nd consecutive month."

Stock quotes in this article: NYB, ^BKX 

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
DOW 16,408.54 -16.31 -0.10%
S&P 500 1,864.85 +2.54 0.14%
NASDAQ 4,095.5160 +9.2910 0.23%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs