Stock Market Sails Through Shutdown’s First Week. What Keeps the Rally Going.

The Charging Bull sculpture near the New York Stock Exchange. (Getty)

Investors are flying blind, and they don’t seem to mind.

Normally, the government would have published its closely watched jobs report on Friday, and stocks would have moved on the data. But with the shutdown starting on Wednesday, the halls of the Bureau of Labor Statistics were quiet when the numbers would normally have been released. Only one employee was scheduled to be on duty.

Nonetheless, the stock market didn’t bat an eye. The S&P 500 index was on track to gain 1.5% for the week, while the Dow Jones Industrial Average had risen 1.6% and the Nasdaq Composite advanced 1.4%—and all three were on pace to close at record highs.

Created with Highcharts 9.0.1Market SnapshotSource: FactSet

Created with Highcharts 9.0.1Health Care Select Sector SPDR ETFNASDAQ Composite IndexDow Jones Industrial AverageS&P 500 IndexSept. 29Oct.-10123456789%

That isn’t entirely a surprise. Markets have tended to rise during recent government shutdowns, and while economic activity can decline temporarily, it has historically come back when things reopen. The one wild card this time around is that the Trump administration has vowed to use the shutdown to order mass government layoffs. If so, the economic damage could be more significant.

Investors, though, seem more focused on the start of third-quarter earnings season than the political drama. A few companies, including Delta Air Lines , will report earnings next week, before big banks like JPMorgan Chase kick off a much wider slate of releases on Oct 14. Lately, corporate returns have been sunnier than other measurements of U.S. economic activity—while S&P 500 earnings are expected to rise by about 8% year-over-year, according to FactSet, the most recent ADP jobs report, a private measurement, recorded a September decline of 32,000 jobs. It could be a blessing that the government employment report hasn’t seen the light of day.

If that weren’t enough, one of the most government-dependent sectors of the economy, healthcare, was the market’s star performer on the week. The Health Care Select Sector SPDR exchange-traded fund gained 7.1%, its best weekly performance since 2022, after President Donald Trump agreed to a deal with Pfizer to shield the company from targeted tariffs as long as it cuts prices on drugs it sells to Medicaid, sells some discounted treatments on a government website, invests in U.S. research, and charges the same for new drugs in the U.S. as it does in other wealthy countries. The requirements were much less draconian than investors had feared, analysts say, and other drug companies are likely to get similar deals.

“If this is all that President Trump does on drug pricing, it is likely a win for the pharmaceutical industry,” wrote Raymond James analyst Chris Meekins.

It’s quite the turnaround for healthcare stocks, which had been the worst-performing sector in the market through the first three quarters of the year. While tech continues to drive indexes higher, a broader-based rally is a particularly good sign. It could stabilize stocks if doubts about artificial intelligence creep into the market again.

For now, no news—including no jobs data—is good news.

Write to Avi Salzman at avi.salzman@barrons.com