U.S. Stock Market Reaches New Heights Amidst Government Shutdown
On Friday, the S&P 500 hit a historic closing high in a volatile trading session. Investors anticipated further interest rate cuts, keeping market expectations buoyant despite the ongoing U.S. government shutdown entering its third consecutive day.
The Dow Jones Industrial Average climbed to a new all-time closing high, while the S&P 500 also closed at a record. However, the Nasdaq Composite ended the day in negative territory.
- Dow Jones Industrial Average: 0.51% increase to 46,758.28 points
- S&P 500: 0.01% increase to 6,715.79 points
- Nasdaq Composite: 0.28% decrease to 22,780.51 points
Weekly performance showed the Dow gaining 1.10%, S&P 500 rising 1.09%, and the Nasdaq advancing 1.32%.
Delayed U.S. Jobs Report Casts Shadow Over Market
The September U.S. non-farm payrolls report, originally scheduled for release on Friday, was postponed due to the government shutdown. Investors still processed a Services ISM survey indicating that the employment index fell for the fourth consecutive month, reinforcing expectations of additional interest rate cuts by the Federal Reserve.
Historically, markets have disregarded government shutdowns. However, some strategists suggested that a prolonged shutdown could introduce more uncertainty for investors and policymakers at the Fed.
Anthony Saglimbene, Chief Investment Officer at Ameriprise Financial: “Markets typically ignore government shutdowns because they are short-lived and don’t have long-term negative impacts on the economy. However, the longer it lasts, the greater the risk that data collection for crucial reports may be delayed or incomplete.”
Fed’s Rate Cut Expectations Amid Uncertainty
Austan Goolsbee, President of the Federal Reserve Bank of Chicago, expressed skepticism about a series of rate cuts given that inflation remains above the Fed’s target.
According to the CME Group’s FedWatch tool, market operators consider a nearly certain 25-basis-point rate cut at the October Fed meeting, with 84% of survey respondents anticipating another reduction in December.
Mexican Stock Markets Decline Amid Economic Data
Mexico’s stock markets closed lower on Friday, reflecting a week of pause to the positive sentiment that has characterized the year amid new economic data.
- S&P/BMV IPC: 0.38% decrease to 61,984.43 units
- FTSE-BIVA: 0.23% decrease to 1,240.77 points
The markets fell for the second time in seven days, marking the second negative week out of the last three.
Last Friday, state-owned Petróleos Mexicanos (Pemex) received an upgraded credit rating from U.S.-based Fitch Ratings following the successful conclusion of a $9.9 billion bond buyback offer.
Pemex’s productive state enterprise now holds a ‘BB+’ rating, the highest level within speculative grade assets.
Key Questions and Answers
- Q: How did the major U.S. stock market indices perform on Friday? A: The Dow Jones Industrial Average reached a new closing high, the S&P 500 also closed at a record, but the Nasdaq Composite ended the day down.
- Q: What caused the delay in the September U.S. non-farm payrolls report? A: The report was delayed due to the ongoing U.S. government shutdown.
- Q: How are investors interpreting the prolonged government shutdown? A: While markets typically disregard shutdowns, a prolonged one could introduce more uncertainty for investors and policymakers at the Federal Reserve.
- Q: What are market expectations for Federal Reserve interest rate cuts? A: Market operators consider a nearly certain 25-basis-point rate cut at the October Fed meeting, with 84% of survey respondents anticipating another reduction in December.
- Q: How did Mexican stock markets perform during the week? A: Both the S&P/BMV IPC and FTSE-BIVA indices closed lower, marking the second negative week out of the last three.
