Markets Take Government Shutdown in Stride for Now — Evening Brief – 10.02.25
The U.S. government has entered its first shutdown since President Donald Trump’s initial term, yet financial markets have shown little concern so far. Treasury yields have remained steady over the past two days, and major equity indexes have pushed to record highs. Historically, shutdowns have had limited market impact: the longest, lasting 34 days from late 2018 into 2019, coincided with a 10% gain in stocks. Over the past half-century, the U.S. has endured 20 shutdowns averaging just eight days, with the S&P 500 declining only about 1.6% on average during such events, according to LPL Financial.
Still, the current shutdown carries a complication for investors: the Bureau of Labor Statistics will likely be unable to release its highly anticipated jobs report on Friday. This leaves investors without one of the most critical macroeconomic indicators, forcing them to lean on private sources of labor data.
Hints of labor market stress are already emerging. ADP’s September report showed private employers cut 32,000 jobs, with declines across all but the largest employers and only three of 10 tracked industries adding positions. Meanwhile, Challenger, Gray & Christmas reported 54,064 announced job cuts in September, down from August but still elevated. Year-to-date, companies have announced 946,426 cuts—the highest level since the pandemic-driven 2020 collapse, and already 24% above all of 2024. That total is up 55% from the same period last year, underscoring mounting pressure on the labor market.
Andrew Challenger, SVP at Challenger, Gray & Christmas, warned: “It’s very likely job cut plans are going to surpass a million for the first time since 2020 and for the ninth time in our series. Right now, we’re dealing with a stagnating labor market, cost increases, and a transformative new technology. With rate cuts on the way, we may see some stabilizing in the job market in the fourth quarter, but other factors could keep employers planning layoffs or holding off hiring.”
For now, markets remain resilient, focusing on earnings and monetary policy. But with labor data disruptions looming and announced layoffs trending higher, investors may need to recalibrate expectations if the shutdown drags on and economic cracks deepen.