Weekly update: Government shutdown, tariJs, and the week ahead

The U.S. government shutdown dominated headlines last week, delaying key data and adding near-term uncertainty. Still, markets held up on hopes for a “Goldilocks” mix of steady growth, easing inflation, and confidence that the Federal Reserve’s tightening cycle has ended. But late in the week, renewed tariff threats from President Trump sparked volatility and a more cautious tone, dramatically reversing some earlier gains. 

Now, here are the important developments to keep in mind over the coming days. 

Stock Index Performance 

• The S&P 500 declined 2.73%. 
• The Nasdaq 100 lost 3.51%. 
• The Dow Jones Industrial Average dropped 2.70%.

Fed Playbook

• Policymakers have dialed down the pace of rate hikes and are letting fresh data call the shots, hoping to wrangle inflation without breaking the economy’s stride. With inflation still above target and job growth cooling, the Federal Reserve’s message to markets is simple: proceed with caution, and be ready to adjust if the numbers demand it.
• Minutes from the Fed’s September meeting revealed a house divided. While policymakers agreed to continue rate cuts into 2026 as the labor market softens, Chair Jerome Powell signaled a pause to reassess. Some officials want deeper cuts; others worry inflation isn't done yet.
• Meanwhile, the government shutdown has created a data blackout. With official employment and production figures delayed, markets are now hyper-focused on private surveys and Wall Street estimates — turning every unofficial report into a potential market mover.

The Consumer Pulse

• Weekly jobless claims by first-time filers of unemployment benefits rose to 235,000 (per JPMorgan and Goldman estimates), pointing to subtle softening in the labor market. Continuing claims by people drawing ongoing unemployment insurance rose slightly to 1.92 million (40,000 higher year-over-year), with economists noting a "no firing, no hiring" pattern as uncertainty lingers.
• The University of Michigan's sentiment index held steady at 55.0 in October, only five points above its historic low (Trading Economics, 2025). While the headline number beat expectations, more households expressed concern about economic conditions ahead, though inflation expectations eased slightly to 4.6%.
• September retail sales hit pause after two strong back-to-school months, with core sales (excluding autos, gas, and restaurants) dipping 0.49% month-over-month. But the year-over-year picture remains healthy at 5.72% growth, suggesting consumers are simply conserving firepower for the holidays.

The Week Ahead 

• Third-quarter corporate earnings season begins, especially among major U.S. financial companies and top tech names. In particular, bank results will provide some hard evidence on the health of consumer credit, corporate loan quality, and spending resilience amid ongoing uncertainty from the government shutdown and delayed economic data.
• The shutdown is impeding critical reports like the Consumer Price Index (CPI), freezing federal paychecks, and clouding fiscal policy. If the impasse persists, there may be heightened market volatility as investors navigate without key data releases.
• Last week’s market swings are a good reminder to stay focused on long-term goals rather than short-term headlines. Periods of volatility are a normal part of investing, and your financial plan should be designed to navigate them — balancing opportunity with protection to keep you on track.

As always, if you’d like to review your portfolio or discuss how current trends might affect your strategy, I’m here to help you stay informed and confident about the path ahead. Reach out anytime!