Earnings, Fed Rates Mean Stocks Can Ignore the Shutdown. This Could Change That.

(Spencer Platt/Getty Images)

The stock market has largely dismissed the ongoing government shutdown so far. But that may soon change.

The S&P 500 has climbed on five of the seven trading days since it began on Oct. 1—and it’s up 0.7% over that period. The AI rally has helped the broader market dismiss the political stalemate, the tech-heavy Nasdaq Composite has jumped 1.6% this month.

But the longer the impasse lasts, the more economic risks heighten. Federal workers will soon feel the impact in their paychecks—either on Friday or Tuesday next week, The Wall Street Journal reported. If it lasts beyond Oct. 28 full paychecks will be missed—and that’s if government employees still have jobs.

The slowing U.S. labor market could take a turn for the worse, with the White House threatening permanent layoffs. On top of that, consumer sentiment has historically suffered a “meaningful drop” during shutdowns, Deutsche Bank strategists noted Friday.

Granted, much of that threat relies on a protracted shutdown. However, markets hate uncertainty, and there is plenty of that to go around.

The Federal Reserve is also working with limited visibility. The September jobs report still hasn’t been released and the publication of crucial inflation data remains uncertain with less than three weeks until the central bank’s next interest-rate decision.

Traders have become less confident in the chances of two more quarter-point cuts this year in recent days, now seeing an 82% probability down from 86% a week ago, according to the CME FedWatch tool.

The Fed and markets are having to look elsewhere for economic clues. That makes next week’s bank earnings from the likes of Goldman Sachs, JPMorgan Chase, and Wells Fargo key to understanding the health of the U.S. consumer.

While earnings season offers another distraction for markets, if the shutdown drags on for too much longer it could become impossible to ignore.

— Callum Keown

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Government Shutdown Hits Day 10 Without a Clear Offramp

Neither Democrats nor Republicans were able to get the 60 Senate votes needed to approve temporary funding and resolve their differences to reopen the federal government. A seventh vote on each of their spending proposals fell short of the required margin on Thursday.

• Republicans want to pass a continuing resolution that keeps spending at current budget levels until Nov. 21. Democrats want to fund the government through Oct. 31, but also extend the Affordable Care Act healthcare subsidies set to expire at the end of the year.
• A Harvard CAPS/Harris poll found that 65% of Americans said Democrats should end the shutdown by accepting a bill to keep current levels of spending. The poll said 53% of respondents blame Republicans for the shutdown, while 47% blame Democrats.
• Stephen Myrow, managing partner with Beacon Policy Advisors, said it will take a more general breakdown in basic government services before the public gets angry enough to force lawmakers to resolve the impasse. That is what ended the 2018-2019 shutdown: Sickouts by air-traffic controllers that grounded and delayed flights nationwide.
• As the number of U.S. flight delays surpassed 4,600 on Thursday, Transportation Secretary Sean Duffy said that some air-traffic controllers could be fired for not coming to work. “If we have some on our staff that aren’t dedicated like we need, we’re going to let them go.”

What’s Next: Active military members could miss their first paychecks on Oct. 15. Dozens of Democrats have urged Speaker Mike Johnson to reconvene the House to approve stopgap funding, but he hasn’t committed to House members coming back to Capitol Hill next week.

— Joe Light and Janet H. Cho

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The U.S. Begins Argentine Rescue. American Farmers Are Waiting.

The U.S. rescue for Argentina may not be popular here. Both the U.S. and Argentina export soybeans and compete in the global market. China isn’t buying U.S. soybeans amid the trade war with Washington, leaving American farmers in a pinch, and they have objected to taxpayer funds being used to help a competitor.

• The final details of the rescue plan have been reached, Treasury Secretary Scott Bessent said Thursday. The U.S. directly bought Argentine pesos and had finalized plans for a $20 billion currency swap, giving Argentina access to U.S. dollars that it urgently needs to support its rapidly weakening currency.
• Argentina’s economy is relatively small, but President Javier Milei is an ideological ally of Bessent’s. The libertarian Argentine president’s government has taken aggressive steps to curb inflation but it now faces a currency crisis, forcing Milei’s government to spend its dwindling dollar reserves defending the peso.
• The Trump administration has promised to aid farmers, but Agriculture Secretary Brooke Rollins said during Thursday’s cabinet meeting that any farm bailout would need to wait for the government shutdown to end. The Treasury didn’t respond to a request for comment on farmers’ concerns.
• Some analysts have speculated that the U.S. may require the Argentine peso to float freely as a condition of the rescue, but Bessent said Thursday that wouldn’t be the case. Argentina’s “exchange rate band remains fit for purpose,” he said.

What’s Next: Argentina has defaulted on its debt under previous governments. Bessent’s announcement didn’t detail any steps to ensure that dollars provided under the swap line would be repaid. Milei will meet with President Donald Trump on Oct. 14.

— Matt Peterson

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Amazon Prime Shoppers Snapped Up Necessities, Personal Items

Amazon.com’s Prime Big Deal Days is an early barometer for the holiday sales season, but only about 30% of Prime shoppers this week bought gifts and holiday items, an early survey says. Nearly 30% bought necessities such as groceries or household goods, and 45% bought something for themselves.

• Consumer data provider Numerator found that half of Prime shoppers compared prices and products at other retailers, primarily at Walmart, Target, Costco Wholesale, and Sam’s Club, before buying on Amazon. Roughly one-third also bought items at Target and Walmart, Numerator said.
• Numerator found that among the top-selling items consumers bought on Prime Day were Dawn Platinum Powerwash, made by Procter & Gamble, Lysol Disinfecting Wipes, made by Reckitt Benckiser, and Squishmallows, made by Jazwares, which is owned by Berkshire Hathaway.
• The annual promotion helped put Amazon in consumers’ heads “which should support growth,” Telsey Advisory Group analyst Joseph Feldman wrote. Amazon’s website traffic increased about 21% in the first 36 hours of Prime Big Deal Days compared with the prior five days, Feldman said.
• Numerator’s survey of 5,100 people who shopped those days found that 58% were very or extremely satisfied with the deals. The average order was $45.42, but about half of households ordered at least twice, making the average household spending about $104.69.

What’s Next: Rival Prime promotions include Target’s Circle Week through Oct. 11, and Walmart’s Deals through Oct. 12. Numerator said 84% of shoppers surveyed plan to buy more holiday items from Amazon over the next three months. Amazon’s third-quarter earnings are expected the week of Oct. 21.

— Sabrina Escobar and Janet H. Cho

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Weight-Loss Drug Giant Novo Seals Major Takeover

Another big deal has lifted the biotech sector as Novo Nordisk announced one of the industry’s biggest takeovers of the year on Thursday morning. The deal will open a new front in its competition with arch rival Eli Lilly.

• The Danish pharma giant—which makes the diabetes medication Ozempic and the weight-loss drug Wegovy—said it would pay $54 per share for biotech Akero Therapeutics, shares of which closed Wednesday at $46.49, for a total upfront payment of $4.7 billion. Akero shareholders will get another $6 per share if the Food and Drug Administration approves its lead drug, the liver-disease treatment efruxifermin.
• The deal is yet another bullish sign for the biotech sector, which is on its best run in years. The SPDR S&P Biotech exchange-traded fund, which tracks smaller and midsize biotech stocks, climbed 1% on Thursday, meaning it is up about 17% since the start of September.
• For Novo, the Akero deal is the biggest acquisition since a complex transaction early last year in which it acquired a handful of manufacturing facilities. The stock has been lagging since the middle of 2024, when investors began to sour on the obesity trade and Lilly took a decisive lead in the weight-loss drug market.

What’s Next: More deals could be coming. As the political and economic environment has improved for biotechs and dealmaking, that has cleared the way for hopes of big acquisitions to lure investors back to the sector. With pharma companies desperate to fill up uninspiring drug pipelines, there has been no lack of deals in recent weeks, including a $4.9 billion obesity acquisition by Pfizer in late September.

— Josh Nathan-Kazis and Elsa Ohlen

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Ferrari Reveals EV Plans, But Financial Projections Disappoint

Ferrari investors got a glimpse of its first electric model at a presentation in Maranello, Italy, that felt more like something out of the Tron sci-fi franchise than a luxury launch event. Problem is, Ferrari also unveiled its financial projections for the rest of this decade, and missed expectations.

• The luxury auto maker’s Milan-listed shares fell 15.8%, their largest one-day decline since it went public in October 2015. Ferrari enthusiasts have to embrace the idea of an electric vehicle. It scaled back its previous guidance about electrification but still expects 20% of its lineup to be electric by 2030.
• The Elettrica cars are being made in-house at a new “e-building” in Maranello, Ferrari’s home. The case for electrification relies on there being an undertapped market of would-be buyers —wealthy people who care about the planet too much to want to drive a supercar run on a traditional gas-fueled engine.
• At 1,000 horsepower, the Elettrica offers as much power output as any other top-end Ferrari, and a top speed of more than 192 miles an hour is in line with most of the company’s existing models. After a single charging session, the car will be able to drive at least 329 miles.
• But Ferrari’s entire business model hinges on cachet. The Prancing Horse’s customers are willing to fork out millions of dollars to make repeat purchases because of the perception that its supercars are best-in-class. If the EV rollout doesn’t go to plan, it could undermine that brand.

What’s Next: It’s debatable whether amplified engine noises can win over fans that already own dozens of traditional, gas-guzzling Ferraris. And like other EVs, the Elettrica won’t have gears—instead, paddles on the steering wheel will enable drivers to adjust power delivery and torque, and switch among three driving modes.

— George Glover

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—Newsletter edited by Liz Moyer, Patrick O’Donnell, Rupert Steiner