US STOCKS-Wall Street indexes little changed as US government shutdown looms

By Sinéad Carew and Niket Nishant

NEW YORK, Sept 30 (Reuters) - Wall Street's three major indexes were close to flat on Tuesday after weak economic data and ahead of a widely expected U.S. government shutdown, which would delay key economic reports as well as heighten investor anxiety about the Fed's interest rate policy outlook.

With valuations stretched, investors have been banking on a dovish Fed to keep alive this year's rally, making any disruption to the central bank's visibility on economic data a source of concern.

While previous shutdowns have had a limited impact on markets, some analysts warned that the current episode could be more disruptive, given the delicate economic backdrop. A Labor Department report on Tuesday showed job openings increased marginally in August, while hiring and layoffs declined. Another data point showed U.S. consumer confidence declined more than expected in September.

The jobs data did not suggest significant job losses, but Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia, said, "it's a very balanced market that could be tipped either way very quickly." He said the market's leadership mix of defensive sectors such as healthcare .SPXHC and consumer staples .SPLRCS along with more cyclical sectors such as industrials .SPLRCI showed a lack of "significant conviction directionally."

"Maybe there's some position-squaring in advance of the prospect of a government shutdown," Luschini said. "Were that to occur, and last beyond Friday, we'll start to accumulate significant economic data such as the jobs report on Friday that won't be released. That leaves investors a little bit in the shadows with regard to what's going on on the ground."

The Dow Jones Industrial Average .DJI rose 10.62 points, or 0.02%, to 46,326.69, the S&P 500 .SPX gained 11.46 points, or 0.17%, to 6,672.56 and the Nasdaq Composite .IXIC was flat at 22,591.15.

Though the session was lackluster, it stands to end the third quarter with gains for both the benchmark S&P 500 .SPX and the tech-heavy Nasdaq .IXIC for the second straight quarter.

Healthcare sector gains were led by stocks including Pfizer PFE.N, which was up more than 6%. President Donald Trump said Pfizer will cut the price of all prescription drugs in the Medicaid program for low-income Americans and sell new prescription drugs at a "most favored nation" price in exchange for tariff relief and that he expects other drugmakers to follow suit.

The Dow Jones Transport Average Index .DJT was down 1%, with airlines leading declines due to the government shutdown threat. A group representing major U.S. airlines had warned on Monday that a partial federal government shutdown could strain American aviation and slow flights, as air traffic controllers and security officers would be forced to work without pay and other functions would be halted. Southwest Airlines LUV.N stock was down 4.7% while United Airlines UAL.O shares were down 3.2%.

Meanwhile, Fed Vice Chair Philip Jefferson warned that the job market could face stress without central bank support, while Boston Fed President Susan Collins said she was open to additional rate cuts.

In individual stocks, chipmaker Wolfspeed WOLF.N surged about 35% a day after exiting bankruptcy. Firefly Aerospace FLY.O sank 20% following a testing mishap that destroyed the core booster for its centerpiece Alpha rocket.

Lamb Weston LW.N shares were up 3.7% after the frozen-potato products maker beat analysts' estimates for first-quarter revenue and profit.

Declining issues outnumbered advancers by a 1.17-to-1 ratio on the NYSE where there were 275 new highs and 80 new lows on the NYSE.

On the Nasdaq, 1,862 stocks rose and 2,758 fell as declining issues outnumbered advancers by a 1.48-to-1 ratio.

The S&P 500 posted 46 new 52-week highs and 4 new lows while the Nasdaq Composite recorded 90 new highs and 77 new lows.