Markets Climb Despite Shutdown and Jobs Miss

Stocks rallied for a fourth straight session on Wednesday, with investors largely brushing off the U.S. government shutdown and a surprise drop in private-sector employment. The S&P 500 and Nasdaq both notched fresh closing highs, helped by gains in healthcare and tech stocks. Treasury yields slipped following soft economic data, reinforcing expectations of a near-term Fed rate cut. Gold hit another record high, while the dollar edged lower.

Key Headlines & Market Movers

• Government Shutdown Begins, but Market Impact Limited: The first U.S. government shutdown in nearly seven years began at midnight after lawmakers failed to pass a funding bill. Despite the political gridlock, equities remained resilient. History shows markets often weather short shutdowns with minimal impact. However, risks could mount if layoffs materialize or the stalemate drags on. The bigger concern now is the potential delay in economic data releases that the Fed relies on, particularly this Friday’s jobs report.

Private Payrolls Decline, Boosting Rate Cut Bets: ADP reported a surprise loss of 32,000 private-sector jobs in September, marking the largest monthly drop since early 2023. Along with weak ISM manufacturing data and soft JOLTS numbers, this suggests the labor market is cooling. Traders responded by increasing bets on at least one more Fed rate cut this year, possibly as early as the October meeting. Without Friday's BLS report, the Fed may rely more heavily on this private data.

• Gold Breaks Records as Treasuries Rally: Gold surged to an all-time high near $3,923 an ounce, supported by declining yields and renewed investor interest in safe havens. The 10-year Treasury yield fell to 4.10% from 4.15%, as soft labor data and shutdown concerns fueled demand. The dollar slipped slightly, reinforcing the trend of late-year dollar weakness noted by strategists.
• Sector Movers - Healthcare, Tech, and Energy in Focus: Pfizer led a rally in healthcare stocks after announcing discounted drug pricing alongside the White House. Drugmakers AstraZeneca, Novo Nordisk, and Eli Lilly also saw strong gains. In tech, Tesla and Nvidia helped lift the Nasdaq. Meanwhile, energy names lagged as crude prices fell back below $62. In corporate news, Intel rose sharply on foundry talks with AMD, and Lithium Americas spiked 23% on news of a U.S. government stake in its Nevada mine.

S&P 500 Sector Performance

Looking Ahead

Investors will now turn their attention to how long the government shutdown lasts and what it means for economic data visibility. With nonfarm payrolls data likely delayed, markets will closely track alternative labor indicators. Expectations for a Fed rate cut remain in play, particularly if the soft data trend continues. Watch for further developments from Washington, corporate guidance revisions, and any spillover into credit or equity markets if the shutdown deepens.

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