In the last two weeks, markets have navigated the fallout from the government shutdown, with steady inflation and slowing job growth reshaping the outlook. At the same time, equities and Big Tech extended gains, while housing and auto markets faced new pressures from regulatory and policy shifts. Let’s dive in!
- Core Inflation Steady: Core inflation held at 2.9% in August, matching expectations, while the Fed’s preferred PCE index rose 0.3% monthly with an annual headline rate of 2.7%. This stability supports the Fed’s plan for further interest rate cuts later this year.
- Labor Market Update: Private payrolls fell by 32,000 in September, the largest decline since March 2023, with August revised to a 3,000 loss from a 54,000 gain. The report highlights labor market weakening amid the government shutdown and ahead of the Fed’s October meeting.
- Government Shutdown: The federal government shut down on Oct. 1 amid funding disputes, primarily over extending Affordable Care Act subsidies. Short shutdowns likely have limited economic impact, but prolonged closures could disrupt incomes, mortgages, travel, and delay key economic data releases.
- Market Rally: Stocks closed Q3 strongly, with the Dow reaching a record high and the S&P 500 and Nasdaq posting their best third quarter since 2020. AI-focused tech gains and the Fed rate cut drove investor confidence despite shutdown concerns.
- Treasury Gains: US Treasuries posted a third consecutive quarterly gain, supported by the recent government shutdown and concerns over slower economic growth. Bond returns exceeded 5% year-to-date, with markets anticipating possible Fed rate cuts amid labor market weaknesses.
- Gold Record: Gold reached a record high of just over $3,880 per ounce amid a US government shutdown, driven by safe-haven demand and Federal Reserve rate cuts. Silver also rose sharply, supported by supply deficits.
- FICO Direct Sales: Fair Isaac Corp. will sell credit scores directly to mortgage resellers, reducing reliance on credit bureaus and increasing price transparency. This caused TransUnion and Equifax shares to fall, while FICO shares rose 32% the day of the announcement.
- Antitrust Lawsuit: Attorneys general from five states sued Zillow and Redfin, alleging a $100 million deal to reduce competition in the online rental housing market. The suit seeks injunctions and business restructuring to preserve competition, following a similar FTC complaint.
- EV Sales Surge: Yearly U.S. electric vehicle sales topped 1 million through September 2025, with a record 10.5% market share in Q3 as buyers rushed to utilize expiring federal EV tax credits of up to $7,500. Tesla and GM lead the market, but the expiring tax credits could potentially slow future sales.
In the next two weeks, markets will track key economic data releases such as retail sales and consumer sentiment, though reporting delays from the government shutdown may cloud the picture. Geopolitically, investors will monitor Middle East tensions and Washington negotiations to reopen the government, alongside early earnings season results.
Footnotes
SFM Market Commentary: 10/10/25
In the last two weeks, markets have navigated the fallout from the government shutdown, with steady inflation and slowing job growth reshaping the outlook. At the same time, equities and Big Tech extended gains, while housing and auto markets faced new pressures from regulatory and policy shifts. Let’s dive in!
In the next two weeks, markets will track key economic data releases such as retail sales and consumer sentiment, though reporting delays from the government shutdown may cloud the picture. Geopolitically, investors will monitor Middle East tensions and Washington negotiations to reopen the government, alongside early earnings season results.
Footnotes