The Mid-Day Buzz

Sophia Reyes · October 3, 2025 1:21 PM

The Mid-Day Buzz

October 3^rd, 2025

Markets push higher despite shutdown worries.

Stocks continued to climb on Friday even as the U.S. government shutdown stretched into its third day. The Dow Jones outperformed both the S&P 500 and the tech-heavy Nasdaq.

The Dow Jones Industrial Average climbed 512 points, or 1.1%, while the S&P 500 gained 0.5% and the Nasdaq Composite added 0.3%. The small-cap Russell 2000 outperformed with a 1.5% jump. All four major indexes closed at record highs.

With Friday’s advance, the three leading benchmarks are on track for a winning week. Both the Dow and the S&P 500 are up more than 1% so far, the Nasdaq has gained nearly 2%, and the Russell has surged 2.5%.

Economic Takeaways:

• The ISM services index for September eased but held at 50, still signaling expansion. Notably, the employment component slipped further into contraction at 47.2, reinforcing signs of a cooling labor market.
• Futures markets now show a roughly 97% chance of another Fed rate cut in October, according to CME FedWatch, helping bolster investor sentiment.
• The Bureau of Labor Statistics confirmed that the September jobs report will be delayed due to the shutdown. Forecasts had called for 50,000 jobs added in September, up from 22,000 in August, with unemployment holding at 4.3% and wages rising 3.7% year-over-year.
• The current shutdown, which began October 1 after lawmakers failed to agree on funding, has already delayed key economic reports. Historically, shutdowns cause temporary slowdowns as furloughed workers wait for back pay, but growth and activity typically rebound quickly once operations resume.
• Gold has rallied more than 45% year to date, hitting record highs and closing in on the $4,000-per-ounce mark amid expectations that falling interest rates will further lift prices.
• WTI crude futures were down 7.5% week to date, looking at its second weekly loss in three and worst week since June. Brent crude has fallen 8.5% this week and is also tracking for its worst weekly performance since June.

Shutdown Extends to Day Three, but Markets Keep Focus on AI and Fed Cuts

The government shutdown entered its third day on Friday, amplifying worries about macroeconomic headwinds, inflation risks, and signs of a cooling labor market. Still, many investors expect the disruption to be short-lived, limiting its overall impact on the U.S. economy. On Wall Street, sentiment remains firm that the shutdown will not derail momentum in the artificial intelligence trade, especially given that past shutdowns have rarely moved markets in a lasting way.

The lapse in funding has triggered a blackout of key economic data. The Labor Department has suspended nearly all activity, including Friday’s release of the September nonfarm payrolls report. While that removes one potential source of market pressure, it also deprives the Federal Reserve of a critical data point ahead of its October policy meeting. According to the CME FedWatch tool, markets largely expect the Fed to lower rates by a quarter point later this month.

At the same time, political rhetoric has heightened uncertainty around jobs. President Donald Trump warned of large-scale federal layoffs, calling the shutdown an “unprecedented opportunity” to cut government agencies. Treasury Secretary Scott Bessent added that the funding lapse could deliver “a hit to GDP, a hit to growth and a hit to working America.” The Congressional Budget Office estimates that about 750,000 federal workers are being furloughed daily.

These warnings follow disappointing private-sector data. ADP reported that September payrolls saw their sharpest drop since March 2023, underscoring a labor market under strain. Wells Fargo Investment Institute strategist Jennifer Timmerman noted that the weaker data “is soft enough to justify another interest-rate cut by the Federal Reserve at the October 29 FOMC meeting.” She added that the prospect of further easing, coupled with subdued Treasury yields—the 10-year sits at 4.11%—has fueled a stock rally and propelled the S&P 500 to fresh record highs.

Goolsbee Warns Against Rushing Fed Rate Cuts Amid Rising Inflation and Weakening Jobs

Chicago Federal Reserve President Austan Goolsbee cautioned Friday that the central bank shouldn’t rush into cutting interest rates, given rising risks to both inflation and employment. Speaking on CNBC’s Squawk Box, he noted that recent data shows inflation ticking higher while payroll growth weakens, leaving the Fed facing challenges on both sides of its dual mandate. “I’m a little wary about front-loading too many rate cuts and just counting on the inflation going away,” Goolsbee said.

On the Move

• The Russell 2000 joined its large-cap counterparts, rising 1.5%. The gain put the benchmark up nearly 12% for the year.
• Quantum computing stocks surged this week, with Rigetti Computing and Quantum Computing each climbing more than 27%, D-Wave Quantum up 23%, and Arqit Quantum rallying nearly 37%. IonQ also added about 9%, extending gains after a strong run the prior week.
• Against the backdrop of a soon-to-expire federal EV tax credit, Tesla (TSLA) reported stronger-than-expected vehicle deliveries on Thursday, rising 7% year-over-year and surpassing Wall Street estimates. Despite the solid results, shares fell 5.1% but remain up about 8% year to date and 69% over the past 12 months. The stock bounced more than 1% in early trading Friday.
• Applied Materials (AMAT) dropped more than 2% after warning that new U.S. export restrictions would weigh on both fourth-quarter and 2026 revenue, according to Barron’s. Lam Research (LRCX) also traded lower on the news, highlighting the industry’s sensitivity to China-related risks. Apple (AAPL) slipped 1% after Jefferies downgraded the stock to Underperform from Hold, arguing expectations for its forthcoming foldable iPhone are overly ambitious.
• Boeing (BA) is facing a potential delay in the launch of its 777X aircraft, with sources indicating commercial service may not begin until 2027, a year later than previously projected. The company declined comment, citing a quiet period ahead of earnings. Shares rose 1% Thursday but dipped early Friday. Fair Isaac (FICO) rallied nearly 18% on Thursday, topping the S&P 500, after announcing a direct-licensing program, and extended its gains into Friday morning.
• Rivian (RIVN) tumbled 7% yesterday despite reporting a 32% jump in third-quarter deliveries that beat analyst expectations. The selloff was driven by weak forward guidance, though shares edged slightly higher this morning.
• Rumble (RUM) climbed 9% after unveiling a partnership with Perplexity, an AI-powered answer engine.
• USA Rare Earth (USAR) surged 12% on reports from CNBC that the company is in close talks with the White House.
• Bitcoin (/BTC) briefly crossed the $120,000 level on Thursday for the first time since mid-August before pulling back Friday. Crypto-related equities joined the move, with Coinbase (COIN) rising 7.5% and MicroStrategy (MSTR) climbing 4.1% on Thursday, both trading flat to modestly higher in pre-market action.
• GameStop dropped 2.7% following a filing in which the company announced it is selling a mix of assets, including common stock and debt, for an undisclosed amount.
• Wells Fargo upgraded Johnson & Johnson to a buy, citing expectations for robust medicine sales over the next two years and the company’s plans to expand its U.S. drug manufacturing operations.

What’s Ahead

The week ahead brings several key earnings reports and economic updates. On October 6, Constellation Brands (STZ) is scheduled to report results, followed by McCormick (MKC) on October 7.

Investors will also be watching the release of the FOMC meeting minutes on October 8 for additional clues on monetary policy. A busy day comes on October 9, with earnings expected from Delta Air Lines (DAL), PepsiCo (PEP), and Levi Strauss (LEVI).

The week concludes on October 10 with the preliminary reading of the University of Michigan Consumer Sentiment Index for October.