Weekly Market Update: 10/06/2025

 

Last week brought plenty of drama. Stocks hit record highs on unabated AI enthusiasm, the Fed hinted at more rate cuts, inflation showed signs of cooling, and a government shutdown delayed key data releases and clouded policy outlooks.

 

For investors, that mix means opportunity wrapped in uncertainty. Strong momentum, shifting Fed signals, tariff pressures, and a Washington-induced data blackout create a fast-changing backdrop. Today, I’ll break down what this means for your portfolio going forward.

 

 

Stock Index Performance 

 

Markets largely shrugged off the government shutdown, viewing it as a short-term political disruption rather than a major economic threat. Historically, shutdowns have had minimal long-term impact on stock performance. 

 

• The S&P 500 rose 1.09%.
• The Nasdaq 100 gained 1.15%.
• The Dow Jones Industrial Average increased 1.10%.

 

 

U.S. Government Shutdown

 

• The federal shutdown that began on October 1 is already muddying the economic waters. With the jobs report and other key releases on hold, investors are left partially flying blind just as the Fed weighs its next moves. The lack of hard data not only complicates policy decisions but also injects fresh uncertainty into markets.

 

• In the near term, economists estimate the hit at about 0.1 percentage point of annualized gross domestic product (GDP) per week — mostly from frozen government spending and reduced productivity. On paper, that’s a modest drag, but the cumulative toll grows quickly if the standoff drags on.

 

• Usually, shutdowns leave only a shallow mark on equities, with bonds steady so long as the debt ceiling isn’t in play. But with the Fed already battling inflation and consumer sentiment fragile, this time around could carry more bite than the usual Washington sideshow.

 

 

Mood vs. Money

 

• Consumer sentiment continued its downward slide, with the University of Michigan index falling to 55.1 in September — its lowest reading since May — reflecting ongoing concerns about inflation and the broader economic outlook.

 

• September’s dip in sentiment was modest but broad, spanning age, income, and education groups, and all five survey components. The one exception: sentiment held steady among households with larger stock portfolios, while those with smaller or no stock holdings saw confidence fall further.

 

• Still, not all indicators point to retrenchment. As we saw, retail sales rose 0.6% in August, and personal consumption expenditures are up roughly 3% year-over-year. That suggests many households are continuing to spend, though a prolonged drop in confidence could eventually weigh on demand.

 

 

The Week Ahead 

 

• A drawn-out government shutdown could unsettle markets and delay the release of key economic data. Updates on budget negotiations or standoffs may prove highly market-moving, while market focus may shift to private-sector indicators and corporate earnings until normal government reporting resumes.

 

• Third-quarter reports will put recent AI-driven enthusiasm and blue-chip resilience to the test. Strong results and confident outlooks could extend the rally, while disappointments from bellwether names risk triggering swift portfolio adjustments.

 

September reminded us that markets can test even the most disciplined investors. Maintaining a steady approach continues to pay off, even as data (or the lack of it) and Fed commentary drive short-term swings. Don’t hesitate to reach out with any questions or concerns.