Last Week
No deal! The government shut down on Wednesday after Senate votes on a continuing resolution did not pass. Following the shutdown, the U.S. Bureau of Labor Statistics was unable to release the much-anticipated September nonfarm payroll report. The ADP report showed that the U.S. lost 32,000 private jobs in September, suggesting the government data would have also shown the continuation of the softening trend in the jobs market. Nevertheless, stock prices marched higher to new record highs, with the S&P 500 climbing 1.15%, the Nasdaq Composite and the Small Cap 600 both gaining 1.3%. Advancing issues outnumbered declining issues by a factor of 5-4, with the Health Care sector having its best weekly performance since 2022 after President Trump agreed to a deal with Pfizer, shielding it from the recent announced tariffs.
The slowing economy would reduce the demand for energy, and the Oil & Gas sector was the week’s bottom performer, as Crude Oil sank almost $5/barrel to the low end of its trading range. Bonds, on the other hand, could benefit from a slowdown, and the yield on the 10-year Treasury moved 7 basis points lower to 4.12%. The Dollar weakened modestly, while Gold continued to glitter, gaining over $100/ounce and closing in on $4,000.
Investors are taking solace in the fact that recent government shutdowns have not had a material impact on the economy or markets. In fact, the VIX, or “Fear Index”, is still near its lowest levels ever recorded. Along those lines, North Star was quoted `in Reuters in the October 2 article, “Prolonged US government shutdown could raise market risks”.
There has been a parade of potential black swans in 2025 that have swiftly been dismissed as warning signs by traders. One might say there is a flock of black swans gathering between the mounting government deficit, political dysfunction, and the still unclear and disruptive trade policies, not to mention the unresolved wars. It would be timely to check in with your financial advisor to make sure your portfolio still reflects your goals and risk profile.
On the Chicago Sports Scene, the Cubs beat the San Diego Padres in the Wild Card round to secure their first playoff series wins since 2017. Bring on the Brewers!!!
This Week
Earnings season is upon us, with four S&P 500 companies releasing earnings. The consensus forecast calls for another solid period of reports.
On Friday, the University of Michigan releases its consumer sentiment survey for October. Historically, the trend in sentiment offered decent directional guidance for the stock market. Curiously, there has been a disconnect for several years between very downbeat consumer sentiment and the rising stock market.
The stocks mentioned above may be holdings in our mutual funds. For more information, please visit www.nsinvest.com.