Markets on Thursday proved once again that they are far less rattled by political theater in Washington than many pundits predict. Even with a fresh U.S. government shutdown in play, global stocks held steady, gold flirted with record highs, and investors’ real focus turned to the Federal Reserve’s next move on interest rates.
Historically, shutdowns have done little to derail market momentum. A Morgan Stanley analysis reminded investors that during past shutdowns, U.S. stocks actually rose an average of 4.4% while real GDP kept expanding at around 2.2%. That track record may explain why Wall Street is brushing off the latest stalemate, choosing instead to parse central bank signals and corporate earnings.
The S&P 500, up 14% year-to-date, briefly touched a record 6,731.94 before flattening. The Nasdaq Composite gained 0.3% to close at another record, while the Dow Jones Industrial Average ended little changed.
But market watchers warned that momentum may not be bulletproof. DataTrek Research co-founders Nicholas Colas and Jessica Rabe flagged correlations in sector indices that often precede 5–18% pullbacks. Their advice: not to sell everything, but to be “selective.”
The shutdown does complicate one important piece of the puzzle: economic data. With the Labor Department unlikely to release its monthly payrolls report on schedule, investors turned to the ADP private-sector jobs report, which showed an unexpected decline in employment for September. That weaker labor signal has only reinforced market conviction that the Fed will cut rates twice before year-end.
As Carmignac strategist Kevin Thozet put it, trying to navigate policy without reliable data is “like a blind man walking with a blind dog.” Investors, however, appear content to let rate-cut speculation guide the way.
Beyond equities, safe-haven assets reflected both caution and opportunity. Gold briefly surged to an all-time high of $3,895.09 before easing 0.5%, with strategists arguing that momentum and fundamentals still favor precious metals. The two-year Treasury yield slid to 3.53%, its lowest in two weeks, underscoring expectations of easier monetary policy.
Currency markets were quieter. The U.S. dollar index hovered near a one-week low, the yen held steady at 147.16 after hawkish hints from the Bank of Japan, and both the euro ($1.1717) and sterling ($1.3441) dipped modestly.
Meanwhile, oil prices continued to slip under the weight of oversupply concerns. Brent crude fell 1.8% to $64.18 a barrel, while WTI slid 1.9% to $60.60.
