Missing Data Throw Fed Cuts Into Doubt. What That Means for Stock Markets.

(Kevin Dietsch/Getty Images)

When faced with a particularly puzzling case and not much evidence to go on, Sherlock Holmes once said, “It is a capital mistake to theorize before one has data.” Investors should heed that advice when deciding whether to pursue a market rotation.

Amid celebrations over the end of the U.S. government shutdown on Wednesday, the White House said October’s inflation and jobs reports will “likely never” be released. Although that’s yet to be confirmed by the agencies responsible, it would leave a significant gap in the data available to the Federal Reserve ahead of its December meeting and allow doubt to creep in about the central bank’s rate-cutting path.

Nervousness is already evident. Boston Fed President Susan Collins—a voting member of the Fed’s rate-setting committee this year—said there should be a “high bar” for further easing. That contributed to market pricing of a December reduction falling to 58% according to the CME FedWatch tool, down from more than 95% a month ago.

The shift in rate expectations could be contributing to a mini rotation in markets. The Dow Jones Industrial Average is hitting new highs and has beaten the tech-heavy Nasdaq Composite by 2.38 percentage points over the past two trading days, its largest such outperformance since February, as all of the Magnificent Seven stocks dropped Wednesday.

Still, it seems premature to suggest tech’s leadership is over. We’re less than a week away from earnings from chip maker Nvidia, whose rival AMD just said its own data-center AI revenue should grow by more than 80% a year for up to five years.

As investors hunt for leads on where stocks go from here, that data point could be the biggest clue.

—Adam Clark

*** Control your news feed. Set Barron’s as a top source in Google for a more personalized experience.

***

The Shutdown Ends. Now Everyone Deals With the Fallout.

President Donald Trump signed a bill to end the longest government shutdown in history after the House approved the spending package. The deal funds the government through Jan. 30 and includes full-year funding for military construction, the legislative branch, and the Department of Agriculture.

• The funding deal should end several crises that bubbled up during the shutdown, including a shortage of air-traffic controllers that disrupted air travel across the country and a battle in the courts over the partial or full payment of food assistance. It also reverses cuts to the federal workforce.
• Subsidies to lower premiums for Affordable Care Act health plans were a main sticking point in the shutdown. Republicans don’t want to extend them when they expire this year, while Democrats want to extend them three years and are trying to force a vote on it with a discharge petition.
• The discharge petition requires Democrats to get 218 signatures, which will mean they need four Republicans to sign on with 214 from their own caucus, including newly sworn in Arizona Rep. Adelita Grijalva. If successful, the bill would bypass any efforts by Speaker Mike Johnson to block a vote on the subsidies.
• October data on labor and inflation might never be produced, according to White House press secretary Karoline Leavitt, who blamed Democrats and said the shutdown may have permanently damaged the federal statistical system. The Bureau of Labor Statistics will announce what data it will release when reopened.

What’s Next: The administration is responding to consumer complaints about the high costs of staple items such as coffee and voter dissatisfaction with the economy. Treasury Secretary Scott Bessent says the administration would be announcing changes to tariffs on coffee, bananas, and other items in the next couple of days.

— Joe Light, Matt Peterson, and Anita Hamilton

***

Chevron Expanding Electricity Business to Power AI Data Centers

Chevron is ready to build its power generation business, aiming to bring a plant online by 2027 to feed an artificial intelligence data center in West Texas. The expansion of the oil producer’s electricity operations comes amid heightened interest in meeting the energy demands of AI hyperscalers.

• Chevron, the second-largest U.S. oil producer, is working with GE Vernova, which builds natural-gas turbines, and investment firm Engine No. 1 on the operation. They are in exclusive talks with a premier customer, and plan to make a final investment decision in early 2026.
• The project is expected to provide 2.5 gigawatts of off-grid power—enough to power almost two million homes —and can expand to five gigawatts if demand necessitates it. Chevron operates about five gigawatts of off-grid power at its remote facilities in areas of Kazakhstan and Australia.
• Jeff Gustavson, who heads Chevron’s carbon-cutting unit, said the company is hearing interest from very large-scale customers whose desire for this power in a short time frame seems “to grow and grow and grow.”
• Chevron trimmed its capital spending guidance to $18 billion to $21 billion a year through 2030. The midpoint of that range represents a slight decline from its current projection, after taking into account its Hess acquisition. Exxon Mobil, meanwhile, is spending more heavily on expansion.

What’s Next: Chevron aims to boost oil and gas production by up to 3% annually through 2030 and says it can pay dividends and capital expenses even if Brent crude falls below $50 a barrel. It plans to buy back up to $20 billion in stock a year assuming oil is $60 to $80 a barrel.

— Avi Salzman and Janet H. Cho

***

Cisco Beats Expectations on Booming Demand for AI

Cisco CEO Chuck Robbins has a bullish outlook, saying the networking company is tracking its strongest year yet, propelled by strong demand for artificial intelligence and the critical role of secure networking. The company beat fiscal first quarter expectations and gave a stronger-than-expected outlook.

• Cisco’s AI Infrastructure orders taken from hyperscaler customers totaled $1.3 billion, reflecting an acceleration in growth, it said. Bullish Cisco investors have been optimistic the increasing demand from enterprises to invest in AI will lead to continued revenue and earnings acceleration.
• It reported fiscal first quarter adjusted earnings of $1 a share and revenue of $14.88 billion. Cisco’s first-quarter networking revenue—the segment that brings in the most revenue and includes gear used in AI data centers—was $7.77 billion, above expectations of $7.45 billion.
• The company is updating networking gear and chips to connect the server racks that power AI data centers, working with AI chip giant Nvidia. Robbins said during a conference call that the AI opportunity is going to accelerate in the second half of its fiscal year.
• In the first quarter, product orders rose 13% from a year ago, with double-digit growth in networking product orders for the fifth consecutive quarter. Cisco expects second-quarter earnings to be between $1.01 and $1.03 a share on revenue between $15 billion and $15.2 billion.

What’s Next: Cisco said all next-generation products, including smart switches, secure routers, and WiFi 7 products, are ramping faster than prior product launches. For the fiscal year, Cisco expects earnings of $4.08 to $4.14 a share on revenue between $60.2 billion and $61 billion.

— Angela Palumbo and Liz Moyer

***

Choice of New FDA Drug Chief Signals Shift in Trump Stance

The Food and Drug Administration has had a turbulent few months under the Trump administration, but the appointment of Dr. Richard Pazdur, a 26-year agency veteran, to lead its Center for Drug Evaluation and Research is a potential signal that things are changing.

• Pazdur’s appointment “may signal a material change” in the approach of FDA Commissioner Dr. Marty Makary and Health and Human Services Secretary Robert F. Kennedy Jr., wrote Raymond James healthcare policy analyst Chris Meekins. Before him, appointments created “significant uncertainty for patients and industry.”
• Pazdur is the creator and director of the FDA’s Oncology Center of Excellence, which works to speed cancer drug approvals. The center he will now lead makes decisions on most new medicines aside from vaccines and complex treatments.
• Kennedy has spent his first few months at the helm of the department wreaking disruption at the agency. He has cut FDA staff, removed top leaders, and appointed Dr. Vinay Prasad to lead the FDA’s other drug review office.
• A less-stormy FDA could be a catalyst for biotech stocks, which have been gaining in recent weeks as worries fade about President Trump’s tariff and drug pricing policies. White House recently struck deals with Pfizer, AstraZeneca, and other drugmakers.

What’s Next: The decision seemed to be taken as a sign of a shift away from the administration’s aggressive focus on remaking the FDA. Pazdur is “likely the best possible person for the role,” RBC Capital Markets analyst Brian Abrahams wrote.

— Josh Nathan-Kazis and Janet H. Cho

***

FanDuel Follows DraftKings Into Prediction Markets

The gambling industry is ramping up its response to event-based trading platforms like Kalshi and Polymarket. FanDuel said Wednesday that it would launch its own prediction market app, just days after rival DraftKings did the same.

• The sports betting firm announced that it will debut a stand-alone prediction market app, FanDuel Predicts, in December as part of a partnership between CME Group and FanDuel’s parent company, Flutter .
• FanDuel Predicts will offer event contracts on stock index funds, economic data, commodities—and sporting events. Event contracts are legal nationwide and not subject to state gambling taxes, even as the contracts based on the outcome of sporting events closely resemble sports betting.
• Last week, DraftKings revealed its own prediction market platform, DraftKings Predictions, which will also offer sport event contracts. The apps won’t be offered in states where online sports betting is legal. The move is likely intended to safeguard the companies’ sportsbook businesses and relationships with state gambling regulators.
• Sport event contracts offered by prediction market firms like Kalshi have been a headache for the gambling industry this year, weighing heavily on shares of DraftKings and Flutter.

What’s Next: The prediction market apps could help give Flutter and DraftKings a presence in states where sports gambling isn’t legal. “Prediction markets will certainly reignite the conversation around sports betting in some states,” says Chris Grove, partner emeritus at Eilers & Krejcik Gaming, a gambling industry market research firm.

— Nick Devor and George Glover

***

—Newsletter edited by Liz Moyer, Rupert Steiner, Callum Keown