Wall Street is running hotter than ever while the federal government sits locked in a shutdown. Stocks are at all-time highs, and the tech sector is driving the surge even without fresh government data.
On Friday, each of the major averages were headed for a winning week. The Dow Jones Industrial Average closed at a record level over its last five sessions. The S&P 500 broke through 6,700 for the first time ever. The Nasdaq Composite outperformed again as semiconductors rallied hard. On Tuesday, Nvidia became the first company to reach a $4.5 trillion market value.
Other assets joined the climb, with gold and Bitcoin moving sharply higher as retail traders piled in. Emerging market stocks are beating U.S. equities this year, and China’s large-cap names are up more than 40% in 2025. For now, the accepted view is that stocks, which historically ignored shutdowns, will keep rising if the suspension of federal operations doesn’t drag on longer than usual.
But there are warnings that this shutdown may be different. The blackout of government data could mean the Federal Reserve heads into its October 28–29 meeting without crucial numbers, just as risks grow around both the labor market and inflation.
“This time, a shutdown is going to matter,” said Hardika Singh, economic strategist at Fundstrat Global Advisors. “When the Fed meets at the end of October, without this data from the nonfarm payrolls report, it’s going to be very, very difficult for them to make a decision.”
Singh added that:
“The president is giving them so much flack for being slow with cutting interest rates. And I think that with the Fed independence already under fire, it makes it all the more important for us to see rate cuts come at the right time for the right reasons.”
Singh, who remains bullish despite concerns, said the lack of clarity heading into the decision could dent a rally that’s already distrusted by many. “The market is in mostly a really good spot, but people are looking for reasons to not believe this rally,” she said. “I think the shutdown here just gives them all the more ammunition to not buy the argument that we’re in a bull market.”
Investors weigh rate cuts as shutdown clouds Fed decisions
Signs of nervousness are visible across Wall Street. Billionaire investor Leon Cooperman said this week that he thinks the market is in the “late innings” of a bull run and could be vulnerable to losses, though he added it’s still less risky than bonds given higher inflation.
Some investors are saying the Fed doesn’t need to cut rates right now, citing elevated inflation, record stocks and a still-growing economy. Markets are pricing in two quarter-point cuts by year’s end, with the next expected later this month according to the CME FedWatch Tool. Torsten Slok, chief economist at Apollo Global Management, said the Fed need not cut given the outlook for stronger inflation.
On Friday, Chicago Federal Reserve President Austan Goolsbee said he is leery of cutting rates too quickly. Even so, bullish momentum is hard to fight. High valuations worry some investors, but David Miller, investment chief at Catalyst Funds, said the market’s heavy tilt toward tech makes it more able to handle premium valuations than in the past.
Today alone, the Dow jumped 500 points. Fundstrat’s Lee told clients this week he expects the S&P 500 could reach 7,000 by December.
“We would not lean bearish because of shutdowns,” he said . “If stocks are down, we would be dip buyers.”
Bitcoin gains as traders hedge against shutdown risks
Bitcoin rallied Friday to within striking distance of its record high as the U.S. shutdown entered its third day. The world’s oldest cryptocurrency traded up roughly 2% on the day at $123,874, about 1% below the mid-August all-time high of just over $124,000.
Investors are moving into the decentralized asset after lawmakers failed to agree on federal funding, forcing the shutdown on Wednesday. Bitcoin is up 12% this week alone.
“The shutdown matters this time around,” wrote Geoff Kendrick of Standard Chartered. “During the previous Trump shutdown (22 Dec 2018 to 25 Jan 2019) Bitcoin was in a different place than now, so it did little.” Kendrick added, “However, this year bitcoin has traded with ‘US government risks’ as best shown by its relationship to US treasury term premium.”
Standard Chartered expects a new high soon and ultimately the crypto reaching $135,000. Traders are also using crypto and other assets to hedge against rising political and economic tensions. Spot gold rose 0.5% to $3,876.55 per ounce early Friday, with prices up more than 2% for the week. Traders also poured money into stocks Friday despite growing geopolitical uncertainties, with the S&P 500 rising 0.5% and the Nasdaq Composite up 0.27%.
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