Review & Preview: The Shutdown Showdown

Sep 30, 2025 19:34:00 -0400 by Megan Leonhardt | #Markets #Review & Preview

Deadline Looms. Congressional leaders have made no progress in negotiating even a short-term funding measure, significantly raising the odds that the government will be closed for business tomorrow. But for all the chaos and challenges that a shutdown will create for federal workers and processes, these events rarely become problematic for financial markets.

On Tuesday, investors continued to shrug off the latest dysfunction in Washington, sending the S&P 500 and the Nasdaq Composite higher on the day, to close out their best September since 2010.

The S&P rose 0.4% on the day, while the Nasdaq Composite was up 0.3%. The Dow Jones Industrial Average rose 82 points, or 0.2%, to mark a record high.

J.P. Morgan’s Jay Barry and his team point out that Treasury yields have historically declined into shutdowns. But with no debt ceiling debate this time, he expects the declines to be limited. If anything, because a shutdown could delay the September employment data due out on Friday, it may lead markets to reduce the likelihood of a quarter point rate cut in October.

The Congressional Budget Office reported Tuesday that the impact of a government shutdown on economic growth will depend on its length, noting that past funding lapses have resulted in small drags on economic growth.

Still, if the government does shut down after midnight, the CBO calculates that approximately 750,000 federal employees—about one-third of the federal workforce—could be furloughed without pay. Back pay for those workers would add up to $400 million a day.

There have been 20 shutdowns since 1977, lasting an average of eight days, according to researchers for the Bank of America Institute. Only seven have exceeded that average. The longest shutdown, of course, started in December 2018 during President Donald Trump’s first administration and lasted 35 days.

Company

Last

Chg

Chg%

Dow Jones Industrial Average

46,397.89

81.82

0.18%

S&P 500 Index

6,688.46

27.25

0.41%

NASDAQ Composite Index

22,660.01

68.86

0.30%

Market Data as of

The Hot Stock: Pfizer +6.8%
The Biggest Loser: Albemarle -6.7%

Best Sector: Healthcare +2.4%
Worst Sector: Energy -1.1%

Created with Highcharts 9.0.1Tuesday, Sept. 30Index performanceSource: FactSetAs of Oct. 1, 4 p.m. ET

Created with Highcharts 9.0.1Oct. 1-0.8-0.6-0.4-0.200.20.40.6%Nasdaq CompositeS&P 500Dow industrials

Big Test for Private Economic Data

If Congress can’t avert a shutdown at midnight, Americans will be without economic guidance from the three major U.S. statistical agencies—the Bureau of Labor Statistics, the Bureau of Economic Analysis, and the Census Bureau.

Contingency plans released by the Commerce and Labor Departments in recent days confirm that economic releases will be postponed for the duration of a shutdown.

The most immediate impact of a shutdown on economic data would be the delay of the latest weekly jobless claims report, which is released by the Labor Department on Thursdays, as well as the highly-anticipated September jobs report, set to be published by the BLS on Friday.

“In the event of a federal government shutdown, the Bureau of Labor Statistics (BLS) will suspend data collection, processing, and dissemination,” an agency spokesperson told Barron’s on Monday. “Once funding is restored, BLS will resume normal operations and notify the public of any changes to the news release schedule on the BLS release calendar.”

That means private data, including from ADP and the Institute for Supply Management, could have a moment to shine.

The ADP data could be the only broad, national measure of job growth until BLS operations resume.

Sure enough, the monthly ADP National Employment Report for September is set to be released at 8:15 a.m. Eastern on Wednesday. Economists surveyed by FactSet expect that the U.S. private employers added 50,000 jobs in September. That’s down slightly from the 54,000 positions that ADP reported in August, with sectors such as leisure and hospitality and construction gaining ground despite the broader slowdown in hiring.

ADP’s estimate of private employment growth has gained credibility in recent months, after the private report was quicker to pick up on the hiring slowdown in the wake of the announced Liberation Day tariffs than federal data. Federal Reserve Gov. Christopher Waller has previously said that he monitors employment from ADP and believes it has provided valuable insights into the labor market. He has cited the data in recent speeches.

The ADP report, which is based on the aggregated and anonymized payroll data of more than 26 million U.S. employees, has generally not been considered to be a good predictor of the Bureau of Labor Statistics’s payroll data, which include both public and private employment. The BLS employment data is more board-based, surveying approximately 121,000 businesses and government agencies, representing approximately 631,000 individual worksites.

“The ADP data has never garnered the same attention from Wall Street economists and traders as the government reports have, perhaps because the BLS data offers a single, easy-to-understand number and because the ADP data does not consistently predict the initial estimate of monthly jobs data from the BLS,” writes Joseph Brusuelas, chief economist of RSM US.

Yet he notes that attention should be paid to the ADP data because the report is based on the actual number of paychecks processed, rather than more variable survey responses and has correlated strongly with BLS private-sector payroll revisions of late. While government statistics remain the “gold standard,” Brusuelas says that the ADP data can help provide insight to trends in payroll levels and growth.

And now it might just become economists’—and investors’—only choice.

The Calendar

Cal-Maine Foods, Conagra Brands, and RPM International report quarterly results tomorrow.

ADP releases its National Employment Report for September. Expectations are for a 50,000 increase in private-sector employment, following a 54,000 gain in August. Employees who remained at their jobs saw a median pay increase of 4.4% in August.

The Institute for Supply Management releases its Manufacturing Purchasing Managers’ Index for September. Consensus estimate is for a 49.2 reading, half a point more than in August.

What We’re Reading Today

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