Wall Street shrugged off the sequester frenzy gripping Washington Friday.
Traders took the news of the failure to halt the $85 billion in sequester cuts in stride, with stocks barely moving despite the stand-off between the Obama administration and House Republicans. The closely watched Dow Jones Industrial Average index continued a strong recent rally with a modest gain, closing Friday at a five-year high and just short of its all-time record.
“For the markets, in terms of the impact of the sequester, it’s really been a non-event,” Hugh McGee, head of the global investment banking division of financial giant Barclay’s PLC, told CNBC in an interview Friday afternoon.
After an initial dip in the first 15 minutes of trading, the markets flattened out throughout the rest of the day. The Dow closed at 14,089.66, up 35 points, or less than 1 percent, from the previous day.
The Dow dropped over 100 points shortly after the opening bell, but steadily made up ground after that.
The Dow is within striking distance of its all-time high of 14,164.53 on Oct. 9, 2007. It finished the week up 89 points from the previous week’s close. Another week like that would have the index eclipsing the record.
The broader Standard & Poor’s index closed at 1,518.20, a marginal gain of 3 points, or less than 1 percent from Thursday’s close, after an initial drop to 1,501.56.
The NASDAQ market closed at 3,168.45, up 8 points or less than 1 percent. It initially fell to 3,130.73, but climbed back up.
The ho-hum reaction to sequestration came even as President Obama was welcoming congressional leaders to the White House Friday morning to discuss the looming $85 billion in across-the board cuts for a wide range of defense and domestic federal programs. The bulk of the cuts do not take effect immediately, but Obama administration officials and some private economists say the cuts will have a negative impact on U.S. economic growth in the coming weeks and months.
The meeting produced no breakthrough and both Mr. Obama and Republican House Speaker John Boehner expressed frustration at the stalemate even as federal agencies and departments began determining how to implement the cuts.