Good morning, investors. History says government shutdowns don’t derail markets and we’re seeing that play out in real time. As usual, the political noise is proving to be just that when it comes to your portfolio.

Investors bought the dip on the government shutdown.

On Wednesday, the S&P 500 closed above 6,700 for the first time ever, securing its 29th record-high of the year after US lawmakers failed to avert the closure of the federal government. 

The Dow also touched a record high.

Stocks had traded lower to start the trading session but reversed course to close the day in the green. 

But that resilience matches history.

Equities have finished higher across the five government shutdowns seen since 1995.

In January 2019, the longest funding gap on record at 22 trading days, the S&P 500 advanced more than 10%. 

Wednesday’s record high signals that either investors are betting on a brief and so inconsequential shutdown, or they simply can’t be bothered to care.

After all, earnings remain robust, the AI trade is only accelerating and recession odds continue to dwindle.

Still, the shutdown does prevent key data releases, including the September jobs report due Friday.

But given the collapse in response rates to government surveys and diminishing credibility of official data, this is a less consequential detail than years past.

As much as the Fed, politicians and media pay attention to Labor Department reports, investors increasingly rely on private-sector gauges like ADP’s payroll report or more modern measures from firms like Indeed and LinkedIn. 

To be clear, alternative indicators point to a slowing labor market with minimal hiring.

ADP just reported a decline of 32,000 jobs in September, marking the weakest print since March 2023 and well below expectations for an increase of 45,000.

The irony, though, is that the shutdown seems to be juicing the market’s bullish impulse, regardless of a potential blackout on economic data. 

Without the establishment jobs report, there are fewer catalysts available to challenge the prevailing narrative of strong earnings and imminent rate cuts.

CME data shows 99% and 87% odds for a quarter-point cut in October and December, respectively. 

The market’s reaction to the shutdown reflects the opportunism of Wall Street.

With Washington in gridlock, investors actually face even less friction to push against the bullish story that’s been driving asset prices higher. 

It seems that in the potential absence of government data, traders are choosing to default to the trend that’s playing out right in front of them — more record highs, AI-fueled earnings, and a growth story that’s put bears on the wrong side of the tape all year.

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🏦 Lisa Cook is staying at the Fed for now. The Supreme Court will allow Cook to remain as a central bank governor before hearing arguments in January about whether the president has the authority to fire her. (Yahoo Finance)

📈Intel stock soared 7% on chip deal reports. Intel could add AMD as a key customer, according to a report from Semafor. The stock soared on the news, and it’s now up 70% since President Trump had the government take a 10% stake in it six weeks ago. (Reuters)

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📰 I’m Phil Rosen, co-founder and editor-in-chief of Opening Bell Daily. I’ve published books, lived on three continents, and won awards for my journalism, which has appeared in Business Insider, Fortune, Yahoo Finance, Bloomberg and Inc. Magazine.

I write our flagship newsletter to prepare you for each trading day — unpacking markets, economic data and Wall Street with analysis you won’t find anywhere else.

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