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lite.cnn.com - on gopher - inofficial
ARTICLE VIEW:
Why stocks keep hitting record highs in the middle of a government
shutdown
By John Towfighi, CNN
Updated:
4:21 PM EDT, Fri October 3, 2025
Source: CNN
Stocks ended the day mixed on Friday as investors continue to brush off
concerns about the government shutdown.
The Dow closed higher by 239 points, or 0.51%, after rising as much as
530 points earlier. The S&P 500 was relatively flat and closed higher
by just 0.01%. Meanwhile, the tech-heavy Nasdaq Composite fell 0.28%.
Stocks have moved higher in recent weeks due to relatively strong
corporate earnings, enthusiasm about artificial intelligence and hopes
for Federal Reserve rate cuts.
The Dow led the market higher on Friday as the rally broadened out to
left-behind sectors while tech investors took some profits. The Dow and
S&P 500 clinched fresh record highs.
History shows that stocks are usually unaffected by shutdowns, which
tend to be short lived and have minimal long-term effect on the
economy.
“History essentially says that government shutdowns have been more
headline events than bottom-line-affecting events,” said Sam Stovall,
chief investment strategist at CFRA Research.
Government data blackout
While the Dow is looking past concerns, Wall Street is also dealing
with a government data blackout that has left investors without the
usual gold-standard indicators of the health of the economy.
The crucial monthly jobs report from the Bureau of Labor Statistics was
not published Friday and is among the data that will be delayed at
least until the ends.
The lack of government data leaves investors, economists and
policymakers with a murkier view of the economy at a crucial moment
when concerns are mounting about a weaker labor market and stickier
inflation.
If the shutdown drags on, the lack of government data could strain
investors’ understanding of the health of the labor market and path
of inflation at a time when stocks are and vulnerable to a surprise.
“There’s no good time for a shutdown, but this one is particularly
ill-timed. The lack of updated labor data coincides with other signs of
fragility in the economy,” Mark Hamrick, senior economist analyst at
Bankrate, said in an email.
Government agencies including the BLS, Bureau of Economic Analysis and
Census Bureau said they are postponing publication of data until after
the shutdown ends.
“It generates an uptick in uncertainty, because we’re not getting
the consistent economic clues that we’re used to,” said José
Torres, senior economist at Interactive Brokers.
Length of shutdown is key
The Dow and S&P 500 hit three on the first three days of the shutdown.
The Dow, S&P and Nasdaq each ended the week with gains of more than
1%.
Still, risks remain: The absence of the jobs report and the potential
for a lack of information going forward adds a fresh layer of
uncertainty to markets and muddies the Fed’s view of the economy.
“It is more difficult than usual to measure the state of the US labor
market, with gold-standard economic indicators produced by the federal
government unavailable during the shutdown,” Bill Adams, chief
economist at Comerica Bank, said in a note.
The grow as it continues, according to Keith Buchanan, senior portfolio
manager at Globalt Investments.
“We just feel like the market is being a little too sanguine,”
Buchanan said. “We don’t think that the market appreciates the risk
of a stickier, more contentious shutdown.”
Relying on private data
Investors and economists are stuck looking to other sources of data for
information about the economy.
On the labor market side, data from private payrolls firm ADP is one of
the tools investors can focus on in the absence of the BLS report.
ADP data published on Wednesday showed the private sector in September.
That spurred traders to ramp up bets that the Fed will cut rates in
October, providing a boost for stocks.
However, it’s a sign that the labor market has deteriorated in recent
months, and without the government data, Wall Street will be without
the monthly gauge of the unemployment rate.
“Economists now lack official economic data from the US,” Paul
Donovan, chief economist at UBS Global Wealth Management, said in a
note.
“Private sector data is a poor substitute,” Donovan said.
“Private data is like viewing the economy through a keyhole —
clear, but with a narrow field of vision. Official data is like opening
the door.”
‘Flying blind’
Paul Christopher, head of global investment strategy at Wells Fargo
Investment Institute, said in a note that he is advising clients to
look past concerns about the shutdown.
“We do not know how long the shutdown will last, but our guidance
remains to look through the event to what we expect will be the main
drivers of the economy and investment returns through the next 12-15
months,” Christopher said.
Catalysts for stocks include a gradual reduction in trade policy
uncertainty and expected Fed rate cuts, he said.
The monthly jobs report is particularly key for the Fed, which is
dependent on official government data to guide policy decisions.
With data set to be postponed, the Fed is “flying blind,” according
to David Seif, chief economist at Nomura.
“If a shutdown … ends up being one of the historically longer ones,
the Fed may have no additional top-tier data, and few data of any kind,
between its 17 September and 29 October rate decisions,” Seif said in
a note.
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