Market Overview
On Monday, the S&P 500 Index ($SPX) and its ETF counterpart (SPY) rose by +0.36%. In contrast, the Dow Jones Industrial Average ($DOWI) (DIA) fell by -0.14%, while the Nasdaq 100 Index ($IUXX) (QQQ) gained +0.78%. Additionally, December E-mini S&P futures (ESZ25) increased by +0.37%, and December E-mini Nasdaq futures (NQZ25) rose by +0.75%.
Stock Gains and Economic Factors
Stock indexes largely ended higher on Monday, with the Nasdaq 100 reaching a new all-time high. Advanced Micro Devices soared more than 23% after its significant AI infrastructure deal with OpenAI stirred excitement in the sector. Increased optimism regarding AI growth and spending translating into corporate earnings has been a major positive factor for the stock market. This positivity is further bolstered by hopes for a resilient U.S. economy and potential Federal Reserve easing.
Yield Pressures and Government Shutdown
However, rising bond yields limited stock gains, with the 10-year Treasury yield increasing by +4 basis points to 4.16%. Verizon Communications experienced a decline of more than -5%, negatively impacting the Dow Jones. The ongoing U.S. government shutdown has now extended into a second week, dampening market sentiment and causing delays in essential economic reports.
Impact of the Government Shutdown
This shutdown has postponed government reports, including the monthly payroll data, and could also delay inflation metrics scheduled for release on October 15. Prolonged shutdowns could lead to the furlough of approximately 640,000 federal workers, raising unemployment claims and potentially increasing the jobless rate to 4.7%.
Market Reactions and Global Events
The continuing U.S. government shutdown, expectations of further Federal Reserve easing, and political instability in France and Japan are driving investors toward safe-haven assets like gold and Bitcoin. The resignation of French Prime Minister Lecornu has added uncertainty to the Eurozone’s economy, while Japan’s election results indicate a possible shift toward easier fiscal and monetary policies.
Upcoming Market Focus
This week’s market attention will be on developments regarding tariffs, trade issues, and potential resolutions to the government shutdown. The Fed’s minutes from the September FOMC meeting will be released on Wednesday, followed by remarks from Fed Chair Powell at a Community Bank Conference on Thursday. On Friday, the University of Michigan’s October consumer sentiment index is expected to drop by -1.1 to 54.0.
