A Shutdown to Trump All Others

The federal government officially entered a shutdown at 12:01 a.m. ET on Oct. 1, the 11th such event involving furloughs in U.S. history. As usual, the lapse in federal funding stems from partisan politics. The shutdown is on track to become the longest government shutdown in U.S. history, surpassing the 35-day record set in 2018-19.

The human and economic costs are vast and grow more severe the longer they last.
The Bipartisan Policy Center estimates that 670,000 federal employees have been furloughed, while another 730,000 are required to work without pay. Exact figures are hard to pin down, but consensus suggests that shutdowns lower GDP by 0.1 to 0.2 percentage points for every week they go on.

It’s already lasted over four weeks, and betting markets suggest roughly even odds that the shutdown lasts somewhere between 45 and 50 days, which would bring us to mid-November — a little over a week before Thanksgiving. Though shutdowns have historically had a limited and temporary impact on the stock market, the longer this one lasts, the harder it is to imagine it not being consequential.

How Many Days Will the Government Be Shut Down This Year?

Euphoria: Earned or Borrowed?

Last month, while Washington grappled with internal dysfunction (what’s new?), the market was focused on other things.

Trade tensions with China briefly ratcheted higher when President Trump threatened the country with an additional 100% tariff. Stocks initially fell sharply on the news, but two things may have led to a fairly quick reversal. First, Trump began to walk back the threat in a move reminiscent of TACO summer. Perhaps more importantly, however, earnings season began, and the results were mostly stellar. This helped offset macroeconomic uncertainty and reinforced the powerful narrative around artificial intelligence, which has driven investor optimism all year long.

The strength of Q3 2025 earnings season was evident. With nearly half of S&P 500 companies reporting in October, 82.8% reported higher-than-expected earnings per share, substantially above the 5-year and 10-year averages of 78.6% and 76.3%, respectively. If sustained for the rest of the Q3 earnings season, that would mark the best performance since the second quarter of 2021.

Alongside this fundamental strength, the market turned notably speculative. Lower quality and higher beta stocks surged, with investors increasingly willing to chase momentum in a possible sign of fear of missing out (FOMO).

% of Companies With Positive EPS Surprises

Market Recap

Asset Returns

October 2025 Sector Total Returns

Macro

•  Federal funding lapsed on October 1, the start of the fiscal year, leading to the U.S. government shutting down.

•  The Federal Reserve lowered its benchmark interest rate by 25 basis points to a target range of 3.75%-4%. Two dissents to the decision were noted, with one official preferring a 50 basis point cut and the other preferring no cut.

•  The Fed also announced it would end balance sheet runoff on December 1, reinvesting any proceeds from maturing Treasurys and mortgage-backed securities into Treasury bills.

•  The September Employment Situation Report, in addition to most official economic data, was not released due to the ongoing government shutdown.

•  September CPI came in at 0.3% m/m and 3.0% y/y, the highest annual rate since January.

•  In one of its most volatile months ever, gold rose 14.3% to $4,381 on October 20 and then proceeded to decline 11.3% to $3,886 on October 28, before ending the month up 3.7%.

Equities

•  With over 65% of the S&P 500 having reported results, the earnings surprise rate stands at 8.6%, in-line with the five-year average.

•  The Information Technology sector beat the broader market by 3.9 percentage points, its sixth month of outperformance in the last seven.

•  Emerging market stocks rose 4.2% despite dollar appreciation, powered by strong tech sector gains from Taiwan and South Korea.

•  Cyclical stocks underperformed defensives by 2.1 percentage points through October 22, before then outperforming by 4.3 percentage points and finishing the month ahead, the sixth consecutive such month.

Fixed Income

•  Though High Yield corporate bond spreads ended the month at 267 basis points (exactly where they began the month), they briefly widened to 304 basis points on October 10 after President Trump’s 100% tariff threat on China.

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Performance data quoted represents past performance. Past performance does not guarantee future results. Market returns will fluctuate, and current performance may be lower or higher than the standardized performance data quoted.

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If this were a normal week, we’d be talking about the Friday jobs report, the state of the economy, and the possibility that the Federal Reserve won’t lower interest rates again in December, especially in light of Chair Jerome Powell’s comments last week.

But it’s not a normal week. The government has officially been shut down for over a month now, leaving investors without much of the economic data they rely on.

Still, we’re not without any signposts.

First, the third-quarter earnings season continues. Though the peak of the mega-cap tech reports is behind us, 136 companies are still set to release their results this week, accounting for over 11% of the S&P 500’s market capitalization. These reports remain a crucial source of insights into corporate health and any burgeoning trends.

Second, with last week’s Fed meeting now in the rearview mirror, Fed officials are no longer in their blackout period. We can expect to hear from several policymakers this week, and any color they provide on what they are seeing in the economy will be a major focus for the market, especially in light of the two dissenting votes last week – one for a 50-basis-point cut and one for no cut at all.

In short, uncertainty is high, and until a resolution in Washington reopens the government, the market backdrop will likely continue to be defined more by what we don’t know than what we do know.

Economic and Earnings Calendar

Note: This list includes all regularly scheduled reports, but most that involve government data will not be released while the shutdown is ongoing.

Monday

•  October ISM Manufacturing PMI: This index from the Institute for Supply Management tracks how purchasing managers across the manufacturing sector feel about the business environment.

•  September Construction Spending: Construction data is a leading indicator of business activity.

•  October Wards Total Vehicle Sales: Cars are a big ticket item for consumers, so underlying vehicle sales trends can help shine a light on demand for durable goods.

•  Fedspeak: San Francisco Fed President Mary Daly will take part in a moderated conversation at Forum Club of the Palm Beaches, followed by Q&A. Fed Governor Lisa Cook will discuss the economic outlook and monetary policy at a Brookings Institution event.

•  Earnings: Clorox (CLX), Coterra Energy Inc (CTRA), Eastman Chemical (EMN), Diamondback Energy (FANG), Hologic (HOLX), IDEXX Laboratories (IDXX), Loews (L), Realty Income (O), ON Semiconductor (ON), Public Service Enterprise Group (PEG), Palantir Technologies (PLTR), Pinnacle West Capital (PNW), SBA Communications (SBAC), Simon Property Group (SPG), Vertex Pharmaceuticals (VRTX), Williams Companies (WMB)

Tuesday

•  September Trade Balance: Trade, made up of exports and imports, is an important driver of economic activity.

•  September Job Openings: A key measure of business demand for labor is the number of job openings, since reducing openings is easier and preferable to layoffs.

•  September Factory and Durable Goods Orders: These metrics give insight into underlying trends for leading cyclical indicators.

•  Earnings: Archer-Daniels-Midland (ADM), AES (AES), Aflac (AFL), American International Group (AIG), Assurant (AIZ), Advanced Micro Devices (AMD), Amgen (AMGN), Arista Networks (ANET), Apollo Global Management, Inc (APO), Axon Enterprise (AXON), Ball (BALL), Broadridge Financial Solutions (BR), CDW (CDW), Corteva (CTVA), Eversource Energy (ES), Eaton Corp (ETN), Exelon (EXC), Expeditors International of Washington (EXPD), Global Payments (GPN), Henry Schein (HSIC), International Flavors & Fragrances (IFF), Gartner (IT), Jack Henry & Associates (JKHY), Leidos Holdings (LDOS), Live Nation Entertainment (LYV), Marriott International (MAR), Martin Marietta Materials (MLM), Mosaic (MOS), Marathon Petroleum (MPC), Match Group (MTCH), Norwegian Cruise Line Holdings (NCLH), Pfizer (PFE), Super Micro Computer (SMCI), Stanley Black & Decker (SWK), Skyworks Solutions (SWKS), Molson Coors Brewing (TAP), Uber (UBER), Waters (WAT), YUM! Brands (YUM), Zoetis (ZTS)

Wednesday

•  October ADP Employment Report: This survey, usually released a day or two before the official government jobs report, offers insight into private sector employment trends.

•  October S&P Global US PMIs: These indexes track how purchasing managers across different industries feel about the business environment.

•  October ISM Services PMI: This index from the Institute for Supply Management tracks how purchasing managers across different services industries feel about the business environment.

•  Weekly Mortgage Applications: Mortgage activity gives insight on demand conditions in the housing market.

•  Earnings: Ameren (AEE), Albemarle (ALB), Allstate (ALL), Amcor PLC (AMCR), APA Corp (APA), AppLovin (APP), Atmos Energy (ATO), Bunge Global S.A. (BG), CF Industries Holdings (CF), AmerisourceBergen (COR), Corpay (CPAY), Charles River Laboratories International (CRL), DoorDash (DASH), Devon Energy (DVN), Emerson Electric Co (EMR), Fair Isaac (FICO), Fidelity National Information Services (FIS), Fortinet (FTNT), Robinhood (HOOD), Host Hotels & Resorts (HST), Humana (HUM), Iron Mountain (IRM), Johnson Controls International (JCI), McDonald’s (MCD), McKesson (MCK), MetLife (MET), Paycom Software (PAYC), PPL (PPL), PTC (PTC), Qualcomm (QCOM), Sempra Energy (SRE), STERIS (STE), Bio-Techne (TECH), TKO Group Holdings Inc (TKO), Texas Pacific Land Corp (TPL), Targa Resources (TRGP), Trimble (TRMB), Zimmer Biomet Holdings (ZBH)

Thursday

•  October Challenger Job Cuts: The firm Challenger, Gray & Christmas tracks the number of layoff announcements each month by sector.

•  3Q Productivity and Unit Labor Costs: These measures provide a breakdown of how productive workers were per hour of work and at what cost.

•  September Wholesale Inventories and Sales: Wholesalers often operate as an intermediary between manufacturers and retailers, serving as a key part of the goods supply chain.

•  Weekly Jobless Claims: This high frequency labor market data gives insight into filings for unemployment benefits.

•  Fedspeak: New York Fed President John Williams will give a lecture at the Goethe University Institute for Monetary and FInancial Stability in Germany, followed by Q&A. Cleveland Fed President Beth Hammack will speak at the Economic Club of New York. Philadelphia Fed President Anna Paulson will speak at the 2025 New Perspectives on Consumer Behavior in Credit and Payments Markets Conference. St. Louis Fed President Alberto Musalem will take part in a fireside chat on the economy and monetary policy.

•  Earnings: Airbnb (ABNB), Akamai Technologies (AKAM), Air Products and Chemicals (APD), Becton Dickinson and Company (BDX), Cummins (CMI), ConocoPhillips (COP), Camden Property Trust (CPT), DuPont de Nemours (DD), Datadog (DDOG), Consolidated Edison (ED), EOG Resources (EOG), EPAM Systems (EPAM), Evergy (EVRG), Expedia Group (EXPE), NortonLifeLock (GEN), Kenvue Inc. (KVUE), Alliant Energy (LNT), Microchip Technology (MCHP), Moderna (MRNA), Mettler-Toledo International (MTD), NRG Energy (NRG), News (NWS), News (NWSA), Parker-Hannifin (PH), Insulet (PODD), Ralph Lauren (RL), Rockwell Automation (ROK), Solventum (SOLV), Tapestry (TPR), Trade Desk (TTD), Take-Two Interactive Software (TTWO), Vistra Energy (VST), Viatris (VTRS), Warner Bros. Discovery, Inc (WBD), Wynn Resorts (WYNN), Block, Inc. (XYZ)

Friday

•  October Employment Situation Summary: This monthly blockbuster release from the Labor Department gives a comprehensive look at employment, wages, and hours worked in the previous month.

•  November University of Michigan Consumer Sentiment: How consumers feel about economic conditions affect their spending habits. This survey places a particular focus on inflation and its trajectory.

•  October New York Fed Survey of Consumer Expectations: This is a measure of peoples’ expectations for inflation, jobs prospects, earnings growth, and more.

•  September Consumer Credit: Borrowing activity gives insight into broader economic activity.

•  Fedspeak: Williams will deliver a keynote speech at the 2025 European Central Bank Conference on Money Markets.

•  Earnings: Franklin Resources (BEN), Constellation Energy Co (CEG), Duke Energy (DUK), KKR & Co (KKR), Monster Beverage (MNST), TransDigm Group (TDG)

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