Weekly Wrap

The major averages advanced further into record territory this week, shrugging off the ongoing government shutdown and positioning themselves for additional gains. The S&P 500 (+1.1%), Nasdaq Composite (+1.3%), and Dow Jones Industrial Average (+1.1%) all notched new record highs, while smaller-cap indices like the Russell 2000 (+1.7%) outperformed.

Economic data provided a mixed backdrop but reinforced the market’s dovish Fed expectations. The September ADP Employment Change reported a decline of 32K private-sector jobs (Briefing.com consensus: 40K). Job openings increased to 7.227 million in August, and housing data remained soft. Notably, some economic data, including Friday’s September Employment Situation Report, was not released due to the government shutdown. Overall, the data, combined with Fed commentary, bolstered expectations for further rate cuts this year. The CME FedWatch tool shows a 94.6% chance of a 25-basis-point cut at the October FOMC meeting and an 85.1% chance of an additional cut in December.

Sector performance this week highlighted notable outperformance in health care (+6.8% WTD), fueled by continued gains in Pfizer (PFE) after the TrumpRx initiative, Humana (HUM) following positive Medicare Advantage guidance, and other large-cap peers. The information technology sector (+2.3%) also contributed to market leadership, aided by strength in chipmakers and NVIDIA’s (NVDA) record-setting week. Tesla (TSLA) helped support the consumer discretionary sector (-0.8%), though it lagged late in the week after reporting Q3 deliveries. The utilities sector (+2.4%) also outperformed, while energy (-3.4%) faced headwinds from OPEC+ production expectations and lower crude oil prices..

The market’s resilience, record highs, and dovish Fed expectations dominated the week’s narrative, reinforcing confidence that additional easing could provide further tailwinds for equities heading into earnings season.

Monday:

The stock market opened to decent gains across its mega-cap names on the heels of Friday's strong session, but a lack of follow-through buying activity saw the S&P 500 (+0.3%) and Nasdaq Composite (+0.5%) close beneath their session highs, though the DJIA (+0.2%) reversed an early loss. 

The Vanguard Mega Cap Growth ETF finished with a modest 0.4% gain after holding a gain close to 1.0% early in the session, and the S&P 500 Equal Weighted Index (+0.3%) performed in line with the market-weighted S&P 500 (+0.3%). 

The information technology sector (+0.5%) led all S&P 500 sectors for the majority of the session but ended up with a gain similar to that of the financials (+0.5%), consumer discretionary (+0.6%), and materials (+0.4%) sectors. 

Chipmakers led the early rally, pushing the PHLX Semiconductor Index to an early 1.4% gain before retreating and closing just 0.2% above its baseline. NVIDIA (NVDA 181.88, +3.69, +2.07%) still closed with a nice gain, moving further past its 50-day moving average (176.74). 

The sector also benefitted from strong performances from memory chip names such as Western Digital (WDC 116.74, +9.86, +9.23%) and Seagate Tech (STX 229.14, +11.63, +5.35%), which were among the top performers in the S&P 500 today. 

In total, nine S&P 500 sectors closed in positive territory, though only the consumer discretionary sector (+0.6%) advanced more than 0.5%. 

Breadth figures were razor thin for the entirety of today's action, reflecting a lack of conviction on the part of both buyers and sellers amid a relatively quiet day from a headlines perspective. Decliners outpaced advancers by a roughly 7-to-6 margin on the NYSE, while advancers held a 6-to-5 edge on the Nasdaq. 

The energy sector (-1.9%) was the outlier in today's trade, moving sharply lower as crude oil futures settled the session $2.21 lower (-3.4%) at $63.48 per barrel following reports that OPEC+ will likely increase outputs in November. 

The communication services sector (-0.5%) also closed lower due to weakness in Alphabet (GOOG 244.36, -2.82, -1.14%) and Meta Platforms (META 743.40, -0.35, -0.05%) as mega-cap strength waned throughout the session.

The sector was, however, home to one of the more exciting corporate headlines today, as Electronic Arts (EA 202.05, +8.70, +4.50%) announced the company will be taken private in an all-cash deal worth roughly $55 billion. Shareholders are set to receive $210 per share in cash, a 25% premium to EA's unaffected $168.32 close on Sept. 25.

Macro-headlines today were also relatively slim, with much of the focus centering around the looming government shutdown if a funding agreement is not reached. 

Senator Majority Leader John Thune says the Senate will vote again tomorrow on a continuing resolution to fund the government for 7 weeks, with Reuters adding that Senate Democrats are weighing short-term funding measures to avert a shutdown ahead of the Tuesday deadline.

According to CNBC, a government shutdown would halt Labor Department operations, preventing the release of Friday's much-anticipated Employment Situation Report. With conflicting views around the appropriate monetary policy path, notable economic data releases take on added significance ahead of the October FOMC meeting.

The market's current rate cut expectations held steady amid a lack of data releases today, though Cleveland Fed President Beth Hammack (FOMC nonvoting member) told CNBC that the current environment is "a challenging time for monetary policy."

U.S. Treasuries began the week on a firmly higher note with longer tenors leading the market higher. The 2-year note yield settled down two basis points to 3.63%, and the 10-year note yield settled down five basis points to 4.14%.

Reviewing today's data:

• Pending Home Sales were up 4.0% in August (Briefing.com consensus 0.4%) after decreasing a revised 0.3% (from -0.4%) in July.

Tuesday:

The S&P 500 (+0.4%), Nasdaq Composite (+0.3%), and DJIA (+0.2%) finished the month and quarter on a modestly positive note by closing near session highs after a choppy session of mixed sector strength.

The healthcare sector (+2.5%) led the seven advancing S&P 500 sectors, rising after President Trump announced that Pfizer (PFE 25.48, +1.62, +6.81%) will lower the prices of its medications in the U.S. and sell some through a new government-run direct-to-consumer site, TrumpRx. Eli Lilly (LLY 762.50, +35.99, +4.95%) also gained on reports it is negotiating to participate, while Merck (MRK 83.92, +5.34, +6.80%), Amgen (AMGN 282.20, +8.23, +3.00%), and other large-cap peers followed higher, lifting the broader sector.

The positive headline catalyst culminated in a strong day for what has been the most underbought sector this year, with today's gains lifting the sector back into positive territory for the year. 

The major averages also benefitted from a 0.9% gain in the information technology sector, which unsurprisingly finished as the best-performing sector this quarter with a 13.0% quarter-to-date gain.

NVIDIA (NVDA 186.58, +4.72, +2.60%) traded to a new record high level, while the broader PHLX Semiconductor Index finished up 0.9%, capping an impressive 12.3% advance in September.

Meanwhile, the consumer discretionary (-0.6%) and communication services (-0.5%) incurred modest losses as several of their key mega-cap names traded lower.

The energy sector (-1.1%) was once again the top laggard, with crude oil futures settling today's session $1.11 lower (-1.8%) at $62.37 per barrel. The financials sector (-0.5%) rounds out today's four retreating S&P 500 sectors.

Smaller cap indices such as the Russell 2000 (+0.1%) and S&P Mid Cap 400 (+0.1) also underperformed the broader market, despite today's economic data providing a boost to the market's expectations for additional rate cuts this year. 

The Conference Board's Consumer Confidence Index fell to 94.2 in September (Briefing.com consensus: 96.0%) from an upwardly revised 97.8 in August, reinforcing expectations for further Fed easing. The CME FedWatch tool now shows a 96.7 percent chance of a 25-basis point cut in October (from 89.8% yesterday) and a 77.7 percent chance of another cut in December (from 66.8% yesterday).

Commentary from Fed officials was mixed today. Fed Vice Chair Phillip Jefferson (FOMC voting member) noted downside risks to employment and upside risks to inflation, while Boston Fed President Susan Collins (FOMC voting member) said modest easing could be appropriate, but a restrictive stance remains warranted. Chicago Fed President Austan Goolsbee (FOMC voting member) said he is not overly concerned about the labor market.

In other macro developments, a government shutdown is still imminent as the funding deadline expires at midnight with no resolution in sight. While the market has been largely unphased by the looming shutdown, it would prevent the release of several key economic data reports, which could further complicate the market's monetary policy expectations. 

For now, the market remains almost certain of additional easing this year, providing another tailwind for equities in what was a surprisingly strong September that saw the S&P 500 (+3.5% month-to-date), Nasdaq Composite (+5.6% month-to-date), and DJIA (+1.9% month-to-date) all capture decent month-to-date gains.

U.S. Treasuries ended Tuesday on a mixed note, as 10s and 30s recorded modest losses while shorter tenors finished in the green. The 2-year note yield settled down 3 basis points to 3.60% (-2 basis points in September) and the 10-year note yield settled up one basis point to 4.15% (-8 basis points in September).

Reviewing today's data:

• The Conference Board's Consumer Confidence Index fell to 94.2 in September (Briefing.com consensus 96.0) from an upwardly revised 97.8 (from 97.4) in August. In the same period a year ago, the index stood at 99.2.
  • The key takeaway from the report is that consumers felt much less positive about business conditions, with thoughts about job availability hitting multi-year lows. That consideration will underpin the market's thinking that another rate cut is at least coming at the October FOMC meeting.
• The Chicago PMI hit 40.6 in September (Briefing.com consensus 41.0), down from 41.5 in August.
• The FHFA Housing Price Index was down 0.1% month-over-month in July after decreasing 0.2% in June.
• The S&P Case-Shiller Home Price Index was up 1.9% year-over-year in July (Briefing.com consensus 1.9%), down from a revised 2.2% (from 2.1%) in June.
• Job openings increased to 7.227 million in August from a revised 7.208 million (from 7.181 million) in July.

Wednesday:

After some early shakiness, the stock market proved to be largely unaffected by the ongoing government shutdown, with today's gains sending the S&P 500 (+0.3%) to new record highs (and past the 6,700 mark), while the DJIA (+0.1%) notched a record closing high, and the Nasdaq Composite (+0.5%) led the cohort. 

Investors steadily bought back the broad-based opening retreat, unfazed by the Senate failing to pass a continuing resolution to fund the government early this afternoon. The senate will leave tomorrow for the Yom Kippur holiday, which means the next votes on a resolution will be Friday and over the weekend. 

While today's resilience suggests the ongoing shutdown will have little effect on the stock market, it will delay the release of the Employment Situation Report, which was set to be released on Friday. Some analysts have expressed concerns that this could murky the market's expectations of further rate cuts from the Fed this year, though today's data reinforced a dovish tone ahead of the blackout.

The September ADP Payrolls report showed a decline of 32k private-sector jobs (Briefing.com consensus: 40k). In response, the CME FedWatch tool now prices a 100% chance of at least a 25-basis-point cut at the October FOMC meeting (up from 96.7% yesterday) and an 87.8% chance of another cut in December (up from 77.3% yesterday).

Stocks steadily traded higher throughout the day, with advancers outpacing decliners by a roughly 8-to-5 ratio on the NYSE and a roughly 4-to-3 ratio on the Nasdaq.

Only four S&P 500 sectors closed with gains, though they were substantial enough to lift the major averages. 

The health care sector (+3.0%) saw another day of impressive gains following yesterday's headline catalyst. Pfizer (PFE 27.23, +1.76, +6.89%) and peers continued to rise after yesterday's announcement of TrumpRx, a government-run platform to lower drug costs. Under the initiative, Pfizer will reduce Medicaid prices and invest $70 billion in U.S. R&D in exchange for a three-year tariff reprieve. 

Eli Lilly (LLY 825.71, +62.71, +8.22%), Thermo Fisher (TMO 531.07, +46.05, +9.49%), and Biogen (BIIB 154.22, +14.14, +10.09%) were just a few of several stocks in the sector to close with gains approaching double digits. 

The information technology sector (+0.7%) also captured a nice gain as strength in its chipmaker components saw the PHLX Semiconductor Index advance 2.1%. 

The consumer discretionary sector (+0.7%) closed similarly, supported by Tesla's (TSLA 459.41, +14.69, +3.30%) rise ahead of what is expected to be an impressive Q3 delivery report tomorrow and Nike's (NKE 74.24, +4.50, +6.46%) strength following its earnings report.

Today's biggest decliners included the materials sector (-1.2%), weighed down by Corteva (CTVA 61.47, -6.16, -9.11%) announcing a planned split into two companies, while the financials sector (-0.9%) saw weakness in its major banking names, and the communication services sector (-0.8%) slipped as most of its components traded lower.

Outside of the S&P 500, smaller cap indices such as the Russell 2000 (+0.2%) and S&P Mid Cap 400 (+0.3%) captured gains similar to that of their larger-cap peers. 

U.S. Treasuries rallied on Wednesday with leadership from the front end after today's weak ADP Employment Change report for September invited more questions about the present state of the labor market. The 2-year note yield settled down six basis points to 3.54%, and the 10-year note yield settled down four basis points to 4.11%.

Reviewing today's data:

• Weekly MBA Mortgage Applications Index -12.7%; Prior 0.6%
• September ADP Employment Change -32K (Briefing.com consensus 40K); Prior was revised to -3K from 54K
• September S&P Global U.S. Manufacturing PMI - Final 52.0; Prior 52.0
• September ISM Manufacturing Index 49.1% vs Briefing.com consensus of 49.2%; Prior 48.7%
  • The key takeaway from the report is that the manufacturing sector remains in a state of contraction, with new order activity under pressure from tariff costs and uncertainty.

Thursday:

The stock market opened on a strong note, lifting the S&P 500 (+0.1%) and Nasdaq Composite (+0.4%) to fresh intraday record highs. With little news to drive action amid the ongoing government shutdown, the market moved sideways for most of the day, but some late afternoon buying interest helped the major averages notch record closing highs as well.

The DJIA (+0.2%) notched a record closing high, though it failed to surpass its all-time high level from last Tuesday. Meanwhile, the small-cap Russell 2000 (+0.7%) outperformed, and the S&P Mid Cap 400 (+0.1%) captured a modest gain after spending most of the day in negative territory. 

Only four S&P 500 sectors finished in positive territory, though a healthy gain in the top-weighted information technology sector (+0.5%) masked broader losses and contributed to the Nasdaq Composite's outperformance. 

Chipmakers fueled much of the move, propelling the PHLX Semiconductor Index (+1.9%) to another record high, while Fair Isaac (FICO 1784.68, +271.97, +17.98%) topped the S&P 500 leaderboard after unveiling a direct license program that allows tri-merge resellers to calculate and distribute FICO Scores directly to clients.

The materials (+1.1%), communication services (+0.3%), and industrials (+0.2%) sectors also finished with gains.

The energy sector (-1.0%) widened its week-to-date loss to 4.0% (the worst among the eleven S&P 500 sectors), as crude oil futures settled today's session $1.31 lower (-2.1%) at $60.48 per barrel. Occidental Petro (OXY 44.23, -3.49, -7.31%) moved lower after news that Berkshire Hathaway Inc. (BRK-B 495.96, -2.24, -0.45%) entered into an all-cash agreement to acquire the company's chemical unit, OxyChem, for $9.7 billion. 

Tesla (TSLA 435.97, -23.49, -5.11%) also moved lower today after reporting over 497,000 vehicles delivered in Q3. The headline figure was record-setting, but it was largely pulled forward by the expiration of the $7,500 EV tax credit, raising questions around Q4 demand. The consumer discretionary sector retreated 0.7% in response despite broader strength throughout its other components.

On the macro front, Senate Majority Leader Thune said that it is unlikely that the Senate will have enough votes over the weekend to reopen the government, meaning the shutdown is on course to continue into next week. The shutdown has done little to keep the major averages from pushing further into record territory so far, though the blackout of key economic data today certainly added to the lethargy of today's action.

Nonetheless, the data that the market did receive before the nearly cemented odds of another rate cut later this month, keeping the market trending higher as earnings season approaches.

U.S. Treasuries finished Thursday with modest gains, pressuring yields on 5s, 10s, and 30s to their lowest closing levels in two weeks. The 2-year note yield settled up one basis point to 3.55%, and the 10-year note yield settled down two basis points to 4.09%.

Friday:

The S&P 500 (flat), Nasdaq Composite (-0.3%), and DJIA (+0.5%) all captured record high levels amid broad strength this morning, though the afternoon saw weakness in mega-cap and tech names send the Nasdaq lower, preventing a clean sweep of record closing highs. 

While the major averages closed off of their session highs, seven S&P 500 sectors still managed to finish in positive territory, with four boasting gains wider than 0.5%. 

Strength was ubiquitous throughout the utilities (+1.2%) sector, as all but two of its components finished with gains today. 

The health care sector (+1.1%) cemented its position as the best-performing sector this week (+6.8% week-to-date) as managed care names continued to outperform after Humana's (HUM 283.72, +27.10, +10.56%) early release of its 2026 Medicare Advantage Star Ratings and reaffirmation of 2025 EPS guidance yesterday.

Meanwhile, the consumer discretionary (-0.8%) and communication services (-0.6%) sectors lagged the broader market due to weakness in their mega-cap components, contributing to a 0.4% loss in the Vanguard Mega Cap Growth ETF. The S&P 500 Equal Weighted Index (+0.4%) outperformed the market-weighted S&P 500 (flat). 

Strength in the broader market outweighed the underperformance of the consumer discretionary and communication services sectors for most of the session, but an afternoon retreat in the information technology sector (-0.3%) sent the S&P 500 to its flatline and the Nasdaq Composite lower. 

Palantir Technologies (PLTR 173.07, -13.98, -7.47%) was the top laggard in the S&P 500 today after a Reuters report said the U.S. Army flagged "fundamental security" flaws in a key battlefield communications program involving the company, raising concerns about its defense contracts.

NVIDIA (NVDA 187.62, -1.27, -0.67%) also saw some profit-taking after setting new record highs multiple times throughout the week. 

Outside of the S&P 500, the small-cap Russell 2000 (+0.7%) and S&P Mid Cap 400 (+0.3%) both advanced as investors sought opportunities outside of the market's largest names. 

Though the major averages finished off of their session highs, the expansion into record territory today reinforced the notion that investors were largely unfazed by the ongoing government shutdown.

Fed Vice Chair Phillip Jefferson (FOMC voting member) noted that both sides of the Fed's mandate are under pressure, and he will continue to assess the incoming economic data. That could become an increasingly difficult task given the government shutdown, as the market did not receive the September Employment Situation Report today.

Rate cut expectations through year-end still held steady, bolstered by Wednesday's weaker-than-expected ADP Payrolls Report, even as Chicago Fed President Austan Goolsbee (FOMC voting member) cautioned against frontloading cuts and Fed Governor Stephen Miran (FOMC voting member) noted that a housing shock could alter his inflation outlook.

U.S. Treasuries retreated on Friday with the belly leading the way, but the entire complex still ended up with solid gains for the week. The 2-year note yield settled up two basis points to 3.57% (-8 basis points this week) and the 10-year note yield settled up three basis points to 4.12% (-7 basis points this week).

Reviewing today's economic data:

• September S&P Global U.S. Services PMI - Final 54.2; Prior 53.9
• September ISM Services 50.0% (Briefing.com consensus 51.7%); Prior 52.0%
  • The key takeaway from the report is that it carries some stagflation messaging for the nation's largest business sector: no growth, contracting employment, and higher inflation.