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What’s Driving Stocks This Morning

Well, the stock market really took the government shutdown hard, didn't it? All major indices rose less than 1% yesterday, shrugging off the partial closure ("essential" employees continue to work and get paid.)

Yet it's in line with historical precedent. In fact, in the 12 months following government shutdowns since 1980, the S&P 500 has generated strong returns of 16.95% on average. So buckle up! We're likely getting ready for another run higher.

As noted yesterday, though, the shutdown does have some real world impact beyond government workers not getting paid. Key data on the health of the economy – such as the Labor Dept.'s jobs report that was due out on Friday – will be delayed.

That's important, because the Federal Reserve has been sounding more cautious lately on cutting interest rates further due to an improved labor picture and rising inflation. Without the jobs report, it's a little blind on that front.

But ADP (ADP) released its National Employment Report for September yesterday and it showed a surprise loss of 32,000 jobs last month when analysts had been expecting a gain of 51,000. While it only covers the private sector, so it's not as sweeping as the federal figures, the losses heartened traders that the Fed will continue its easing policies.

The Big Picture: Government shutdowns are more political theater than anything. They rarely have any lasting impact on the economy – or the way things work in Washington. 

Over the last 50 years, the average length of a shutdown is just eight days. And then things go back to business as usual. The difference this time is President Trump is hinting at using the shutdown to fire thousands – possibly hundreds of thousands – of government workers. 

The Office of Management & Budget (OMB) has told agencies to prepare plans for "reductions in force" (RIFs) for employees tied to programs without funding.

We'll see whether that's just a negotiating tactic to bring Democrats to heel or if he will carry through on the threat. But it could be the first real change to the size and scope of government that we've seen if he makes good on it.
 

Stocks on the Move (Pre-Market)

• Advanced Micro Devices (AMD) $167.65 +2.2% - The downward pressure on the chipmaker resumes following its earnings report, though it did notch a 2% gain yesterday.
• Tesla (TSLA) $465.78 +1.4% -  The AI shop is also giving back some of yesterday's gains, on no specific company news, though the government shutdown might be playing a role here as it relies in large part on federal revenue.
• Fair Isaac (FICO) $1,599.75 +5.7% - The utility operator is surging on reports a BlackRock (BLK) unit will acquire it for $38 billion.
• Western Digital (WDC) $135.21 +3.5% - The athletic wear maker is jumping after beating earnings estimates and showing a surprise rise in sales.
• Equifax (EFX) $223.00 - 12.1% - The oil and gas company is moving higher on reports Berkshire Hathaway (BRK-A)(BRK-B) will acquire its chemicals business.
• Transunion (TRU) $74.72 - 9.2% - The utility operator is moving lower on a downgrade by RBC Capital from outperform to sector perform.
   

Upgrades & Downgrades

Upgrades:

• Autodesk (ADSK) upgraded to Buy at HSBC Securities, tgt 343
• Moody's (MCO) upgraded to Buy at Deutsche Bank, tgt $528
• Grocery Outlet (GO) upgraded to Telsey Advisory Group, $20
• BRO (DOOO) upgraded to Buy at Citigroup, $73

Downgrades:

• Marvell Technology (MRVL) downgraded to Hold at TD Cowen, tgt $85
• DraftKings (DKNG) downgraded to Under Perform at Northland Capital, tgt $33
• AT&T (T) downgraded to Equal Weight at Barclays, tgt $30
   

Today’s Bottom Line:

The government shutdown is having one dramatic result: gold broke above $3,900 per ounce for the first time ever. The precious metal is up over 48% in 2025 and is on track for the biggest annual gain since 1979. 

Silver is seeing similarly striking gains. The gray metal, which has greater utility than gold because of its industrial uses – notably in solar and EVs because of its greater conductivity – is up almost 60% year-to-date, hitting its highest level ever above $47 an ounce.

If they maintain these gains for the next two months, precious metals will be the best-performing asset class for the second consecutive year.

The rally is not just retail investors buying up bullion, but has been supported by global central-banks and increased inventories in gold-backed exchange-traded funds.

Gold is now the second-largest central bank reserve asset in the world, surpassing the euro and trailing only the U.S. dollar, according to the European Central Bank.

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