The government shutdown dragged into a second week, which means that a couple of major announcements were put off again. First, the release of the September jobs report was moved to October 17th while the unemployment claims data for the past week was also postponed.
The main event of the week occurred on Wednesday when the minutes of the most recent FOMC meeting were released. They showed that the Fed is largely divided over how fast to ease monetary policy. While some believe that there should be another two rate cuts in 2025, others think that easing should occur more slowly.
A lack of data is likely preventing the Fed from moving off that stance for now as it’s unclear when new information about the job market will be released. Furthermore, there is still some lingering uncertainty over whether tariffs will lead to higher inflation. The expected release of the Price Producers Index (PPI) next week may give some clues about inflation.
The other important data point released this week were the consumer sentiment and inflation expectation reports produced by the University of Michigan. Consumer sentiment came in at 55, which was higher than the expected 54.1. Respondents believed that the inflation rate would be 4.6 percent 12 months from now.
It was also announced Friday afternoon that President Trump planned to lay off thousands of government workers. Typically, workers are furloughed during a shutdown and given backpay when the government opens again. However, there are questions as to whether those laid off will be rehired or if those who remain furloughed will get backpay. Trump did announce members of the military would continue to be paid.
The S&P 500 lost 2.69 percent this week to finish at 6,552 at the close of trading on Friday. This was a loss of 181 points for the index that was flirting with all-time highs..
The Dow also fell by 2.6 percent this week to close at 45,479 at the end of the day on Friday. This was a loss of more than 1,200 points for another index that has approached yearly and all-time highs in recent weeks. On Monday, the Dow opened at its weekly high of 46,820 before reversing and sliding most of the week.
Finally, the Nasdaq lost 2.49 percent this week to close at 24,221. This was a loss of 621 points for an index that has outperformed its major rivals for most of the year. On Friday morning, the market peaked at 25,177 before reversing and closing at the low of the week.
In international news, New Zealand announced that it was going to lower its key interest rate by 50 basis points to 2.5 percent. Analysts expected the country’s central bank to only cut by 25 basis points. On Friday, Canada announced that its unemployment rate remained steady at 7.1 percent while the economy added more than 60,000 jobs over the last month.
The main event this coming week will be the PPI figures and retail sales numbers for the past month. However, this will not happen if the government shutdown is not over by Thursday. In addition, the September jobs report will be issued Friday if the shutdown ends. Jerome Powell is scheduled to speak on Tuesday, and his words will undoubtedly cause some market volatility.