Stocks Edge Higher Despite Continued Shutdown

Published as of: October 2, 2025, 9:11 a.m. ET

(Thursday market open) With tomorrow's nonfarm payrolls report looking less likely to come on time due to the government shutdown, major indexes are slightly higher early Thursday on reduced volatility, as investors continue to follow the trend. A quick shutdown that sets back the report a few days might not move the needle, but a long one that also threatens release of mid-month inflation data might keep the Fed on the sidelines, unwilling to cut rates at its late October meeting without the data. And there are signs that a standoff could be lengthy, with Treasury Secretary Scott Bessent saying a prolonged closure might hurt U.S. economic growth.

"October's Fed meeting was already shaping up as a difficult decision on whether to continue rate cutting," said Michael Townsend, managing director, legislative and regulatory affairs at Schwab. "A lack of critical data would make the Fed's decision-making process even tougher."

Negotiations in D.C. are on hold today, with the Senate out of session in observance of Yom Kippur. On Wednesday, the S&P 500 index posted a new record high close above 6,700 for the first time. Health care—often seen as a defensive sector with fortunes less tied to the AI story—led again Wednesday and has been on a roll. The 3% gain was triple any other sector, while five of 11 S&P 500 sectors declined. Two of the three Magnificent Seven-dominated sectors—info tech and consumer discretionary—had solid outings, with chip stocks getting support from a 7% climb by Intel (INTC).

1. Labor market strain: Given the potential absence of federal jobs data, market watchers are zeroing in on September numbers from Challenger, Gray & Christmas. The outplacement and coaching firm said U.S. employers announced 54,064 job cuts last month, a 25.8% year-over-year drop. Since January, however, employers have reported nearly 947,000 job cuts, which is the highest year-to-date reading since 2020 and the fifth-highest overall in the 36 years Challenger has been reporting on the metric. The sectors most affected by the staff reduction are government—as almost 290,000 Federal workers were impacted by DOGE cuts—technology and retail. On Wednesday, ADP reported a 32,000-decrease in private-sector payrolls in September following a revised decline of 3,000 the previous month.
    
2. Stocks and the shutdown: After several days of acting as though a shutdown wasn't a threat, the stock market headed lower yesterday—at least initially—when the government actually closed. Then it recovered to new record highs. Past shutdowns haven't hurt stocks much, but a prolonged standoff could add stress to an already cooling jobs market by imperiling the positions of up to 750,000 federal employees. Firings or furloughs would mean short-term household finances get squeezed, reducing discretionary spending and retail sales. The closure could also deepen concerns about Washington's ability to manage fiscal policy, and amplify market volatility in equities, bonds, and the U.S. dollar. "The longer it takes to reach a deal, the more likely it is to weigh on sentiment," said Nathan Peterson, director of derivatives analysis at the Schwab Center for Financial Research. From a sector standpoint, investors should watch activity in industries tied to federal contracts such as defense, construction, and technology services, as they may face delayed payments. Tourism, airlines, and regional economies with large federal workforces would also likely suffer during a prolonged shutdown.
    
3. Crypto regulation moves: A major cryptocurrency market-structure bill is still being hashed out in the Senate, but the Trump administration's efforts to make the U.S. "the crypto capital of the world" are advancing on other fronts. The Securities and Exchange Commission (SEC) is taking steps toward allowing stocks to trade on blockchains like crypto coins, including meeting with representatives from the New York Stock Exchange. Such trading—called tokenization—could "begin quickly," according to The Information. The SEC also gave a green light for state-regulated trust companies that aren't banks to hold crypto assets for institutional investors from around the country, expanding the list of permissible crypto custodians. One commissioner spoke out in opposition, pointing to varying levels of (often less-rigorous) oversight at the state level. Meanwhile, the White House withdrew Brian Quintenz's nomination to serve as chair of the Commodity Futures Trading Commission (CFTC), which has jurisdiction over crypto derivatives markets. Quintenz, who enjoyed broad support among the crypto industry, has blamed opposition from Cameron and Tyler Winklevoss, owners of the Gemini crypto exchange and major Trump donors, over Quintenz's stance regarding a previous CFTC enforcement action against Gemini.

• Announcing its biggest deal since 2022, Berkshire Hathaway (BRK) said it would acquire Occidental Petroleum's (OXY) petrochemical division, OxyChem, for $9.7 billion. BRK is fractionally lower in pre-market activity, while OXY is up 1.3%.
   
• Fair Isaac (FICO) is poised to open more than 15% higher after the company debuted a system providing mortgage lenders with direct access to FICO scores. In response, Transunion (TRU) and Equifax (EFX) have each dropped roughly 8%.
   
• Intel's 7% gain yesterday came after CNBC and other news outlets reported that the chip maker is in early talks to add Advanced Micro Devices (AMD) as a customer. A deal like that would be a boost to Intel's efforts to revive its foundry business and build chips domestically for a large firm. The stock is pulling back slightly ahead of the open.
   
• Pfizer (PFE), Eli Lilly (LLY), Merck (MRK), Biogen (BIIB), Amgen (AMGN), and Regeneron (REGN) all climbed substantially yesterday. While two days aren't a trend, it's possible the strength in health care could reflect sector rotation as investors look for lower-cost stocks and higher dividend yields, especially as Treasury yields fall. Lower rates could mean reduced drug development costs, too, and possibly bring more merger and acquisition interest into biotech.
   
• Super Micro Computer (SMCI) soared more than 9% yesterday, helped by general strength in the tech sector but also perhaps reflecting speculative interest as investors put money into shares that had slumped the last two months. There wasn't any obvious news behind the move, but the stock is continuing higher ahead of the open.
   
• Home builder shares including D.R. Horton (DHI), PulteGroup (PHM), Lennar (LEN), and KB Home (KBH) all rallied Wednesday despite a drop in weekly mortgage applications. Lower Treasury yields and growing hopes of more rate cuts buoyed this sector. However, lower rates may be helping smaller banks that depend more on consumer and small business loan demand and would benefit if that picked up.
   
• Financial stocks, especially big banks, finished mainly in the red Wednesday as Treasury yields fell. Higher long-term yields tend to support profit margins for banks.
   
• The CME FedWatch Tool still prices in a nearly 100% chance of a rate cut later this month. Chances of two cuts before year-end are 86%.
   
• Bitcoin (/BTC) is edging higher, continuing to approach the previously elusive $120,000 level. Crypto-linked stocks Coinbase (COIN) and Strategy (MSTR) have each gained more than 2% in pre-market trading.

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CME crude oil futures (/CL—candlesticks) fell sharply this week on fears a long U.S. government shutdown could slow economic activity and hurt demand even as OPEC raises production. The front-month contract now trades well below its $64.18 50-day moving average (blue line) and is approaching an area near $61.40 (red line) that's been a support point on previous dips in August and September. Crude hasn't been below $61.40 since late May, when it was still recovering from the market's tariff scare that sent it as low as $55.12 in April. That was before geopolitical tension sparked a June and July rally that quickly faded. Weak crude oil prices often hurt the energy sector but can be a boost for consumer spending as less of their money goes into gasoline.

Check out the investors' calendar for a summary of the top economic events and earnings reports on tap this week.

October 3: September nonfarm payrolls and unemployment rate and ISM Services PMI^®. 
October 6: Expected earnings from Constellation Brands (STZ).
October 7: Expected earnings from McCormick (MKC).
October 8: FOMC meeting minutes.
October 9: Expected earnings from Delta Air Lines (DAL), PepsiCo (PEP), and Levi Strauss (LEVI).