No shutdown fear in the stock market

Briefing.com Summary:

*The stock market hit new record highs despite the government shutdown.

*Berkshire Hathaway is buying Occidental Petroleum’s chemical business for $9.7 billion cash.

*NVIDIA and the mega-cap stocks continue to run.

Did you see the fear in the stock market’s eyes yesterday over the news of a government shutdown? Right. Neither did we. All the market did yesterday was steamroll its way to new record highs.

If that was fear of a shutdown, a lot of participants would be content to live with that fear everyday. The reality of course is that the market didn’t act out of fear yesterday, so much as it did out of confidence that there won’t be any meaningful economic impact due to the shutdown and that there will be at least two more rate cuts before the end of the year.

As it so happens, the government, more or less, is still shutdown today, and the equity futures market, more or less, isn’t bothered by that.

Currently, the S&P 500 futures are up 17 points and are trading 0.2% above fair value, the Nasdaq 100 futures are up 137 points and are trading 0.5% above fair value, and the Dow Jones Industrial Average futures are down 22 points and are trading in line with fair value.

The mega-cap stocks continue to do the heavy lifting for the market, with NVIDIA (NVDA) remaining in breakout mode, Tesla (TSLA) continuing to run ahead of its Q3 deliveries report today, and Apple (AAPL) and the rest of the gang sporting modest increases.

Separately, Occidental Petroleum (OXY) is up 1.4% on the news that Berkshire Hathaway (BRK.B) is buying its chemical business, OxyChem, for $9.7 billion in cash, and Dow component Nike (NKE) is adding to yesterday’s post-earnings spike, up 0.4% on a KeyBanc upgrade to Overweight from Sector Weight.

Today is the Jewish holiday Yom Kippur, so trading volume in aggregate is expected to be on the lighter side. Another factor contributing to that expectation is that the weekly Initial Jobless Claims and August Factory Orders reports won’t be released, as scheduled, due to the government shutdown.

We can add the September Employment Situation Report to that mix as well. It would have been released before Friday’s open, but with the Yom Kippur holiday, the Senate is not holding another vote on the continuing resolution until Friday.

The stock market, Treasury market, and even the Federal Reserve are left to wonder what the data might have shown. Nonetheless, the fed funds futures market looks increasingly convinced, particularly after yesterday’s ADP Employment Change Report for September, that little is getting in the way of additional rate cuts at the October and December FOMC meetings.

The CME FedWatch Tool shows a 98.9% probability of a 25-basis-point cut to 3.75-4.00% in October and an 86.7% probability of a 25-basis-point cut to 3.50-3.75% in December.

—

Originally Posted October 2, 2025 – No shutdown fear in the stock market