Markets skyrocket, then plummet after government reopens

MANHATTAN (CN) — Equity markets had a rollercoaster of a week, hitting huge new highs and then giving up most of those gains as the government shutdown ended.

Markets hit record highs again early in the week, as lawmakers closed in on a deal to end the historic 43-day government shutdown. However, once the longest shutdown in American history ended, markets actually turned south.

By the closing bell on Friday, the Dow Jones Industrial Average — which eclipsed the 48,000-point mark on Wednesday — gained only 160 points for the week. The S&P 500 and Nasdaq, both of which saw sizable increases midweek, increased by just seven points and lost 104 points, respectively.

Tom Essaye of the Sevens Report wrote in an investor’s note this is likely due to the fact that “more than a month’s worth of economic data is set to be released in the days ahead, and the potential the data paints a negative or stagflationary picture of the U.S. economy is relatively high.”

Due to the shutdown, investors this week were again left without critical inflation reports and retail sales data. So, too, was the Federal Reserve, which is scheduled to meet next month to discuss another possible interest rate cut.

White House spokeswoman Karoline Leavitt blamed Democrats for the missing data. “All of that economic data released will be permanently impaired, leaving our policymakers at the Fed flying blind at a critical period,” she told reporters on Wednesday before Trump signed into law the government funding bill.

National Economic Council Director Secretary Kevin Hassett further elaborated on Thursday that the next released jobs report won’t include unemployment data.

“So we’ll get sort of half a jobs report,” Hassett told reporters. “We’ll be able to concoct the correct number after we look back, but we will never know what the unemployment rate was in October, because there wasn’t a household survey with that.”

The meager economic data released this week seemed to startle Wall Street. Foreclosures, for example, increased by 20% last month, the eight straight month of year-over-year increases, according to real estate data aggregator ATTOM.

“The current trend appears to reflect a gradual normalization in foreclosure volumes as market conditions adjust and some homeowners continue to navigate higher housing and borrowing costs,” ATTOM CEO Rob Barber said in a statement.

Business sentiment and labor concerns also continue to roil small businesses. The latest small business optimism survey from the National Federation of Independent Business fell slightly from last month to hit 98.2 points. The group’s “uncertainty index” also fell 12 points to 88, the lowest point so far this year.

Labor quality was the biggest problem reported by surveyed businesses, with almost one-third of respondents saying they could not fill job openings. Still, experts said the report wasn’t a doomsday indicator.

Wall Street will be keen to watch speeches from Federal Reserve officials, Essaye wrote, adding that any hawkish tone could be an indication the Fed will not cut interest rates again in December.

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