Shutdown Stalls Key Economic Data, Leaving Fed “Flying Blind” Ahead of October Meeting
The ongoing U.S. government shutdown entered its third day Friday, freezing the release of the September employment report and potentially delaying the Consumer Price Index (CPI) set for October 15. The Institute for Supply Management (ISM) services index dropped to 50.0 in September, its lowest level since 2010 and exactly at the threshold dividing growth from contraction. The ISM prices-paid index rose to 69.4%, approaching its 2022 highs, highlighting persistent service-sector inflation. Apollo Global economist Torsten Sløk cautioned that “inflationary pressures in services remain stubbornly high,” emphasizing that this trend is precisely what the Federal Reserve has feared in recent speeches. The absence of employment and inflation data leaves policymakers without clear signals before the October FOMC meeting, complicating the case for additional rate cuts. Market-based expectations still imply at least two rate reductions before year-end, but traders are increasingly wary of policy missteps amid an opaque data environment.
Quantum Computing, Streaming, and Rare Earths Capture Speculative Flows
Momentum shifted into niche segments as speculative capital chased smaller, high-volatility stories. Rigetti Computing (NASDAQ:RGTI) surged 13.16% to $40.06 after disclosing $5.7 million in quantum system sales, while D-Wave Quantum (NYSE:QBTS) gained 4% on new AI optimization trials with U.K. law enforcement. Year to date, Rigetti and D-Wave are up 132% and 247%, respectively. Rumble (NASDAQ:RUM) rallied 16% to $11.92 after announcing a partnership with Perplexity AI, integrating AI-powered discovery into its platform. Conversely, Netflix (NASDAQ:NFLX) fell 5% to $623.40, suffering its sharpest weekly loss since April after Elon Musk publicly urged consumers to cancel subscriptions.
Rare earth producers also gained traction as supply security returned to the policy spotlight. USA Rare Earth spiked 15%, Lithium Americas (NYSE:LAC) climbed 28%, and MP Materials (NYSE:MP) added 3% after reports that the Trump administration was considering direct equity stakes in critical-mineral companies. These developments underscore the administration’s industrial strategy to rebuild domestic supply chains for strategic resources.
Macro Resilience Meets Valuation Strain as Goldman Warns of Future Drawdown
Despite shutdown uncertainty and mixed macro signals, equity markets remain buoyant. Goldman Sachs (NYSE:GS) CEO David Solomon projected the U.S. economy would accelerate into 2026, supported by stimulus and AI infrastructure investment, but warned that a market “drawdown within 12–24 months would not be surprising.” Goldman stock closed 1.36% higher at $789.98, with investors interpreting Solomon’s tone as cautiously constructive. His comments echo the broader tension between a solid economy and overheated valuations, particularly in AI-linked megacaps. President Donald Trump’s threats to fire federal workers and defund Democratic-led projects during the shutdown have yet to dent investor sentiment, though they add another layer of policy volatility. The divergence between record equity prices, sticky inflation, and softening service-sector data suggests that the Fed’s room to maneuver is narrowing fast.
TradingNEWS Outlook and Verdict – Market Leadership Narrowing, Maintain HOLD Bias
With the Dow at 46,758, the S&P 500 at 6,716, and the Nasdaq at 22,780, Wall Street enters the new week in technically overbought territory. Breadth is thinning: AI infrastructure, industrials, and healthcare are leading while traditional growth and semiconductor plays show signs of fatigue. Treasury yields above 4.12% and elevated service-sector inflation indicate policy risks are re-emerging even as investors bet on more Fed easing. The next key catalyst will be the CPI release—if it is not delayed again—and any commentary from Chair Jerome Powell later in the week. Until macro visibility improves, the risk-reward balance favors staying neutral rather than chasing highs.
Verdict: HOLD.
Momentum remains positive but fragile. The “AI supercycle” continues to inflate valuations across sectors, yet the underlying fundamentals—slowing services, data void, and stretched multiples—justify caution. Unless upcoming inflation readings confirm disinflation, the rally’s durability is at risk. Investors should guard profits, monitor AI-linked earnings from NVDA, AMAT, and PLTR, and be alert for policy or macro shocks that could unwind the current “perfect week” into a volatile October.
