Key Takeaways
- U.S. growth remains resilient
- Japan gets a new leader
- Markets unfazed by shutdown
On this week’s edition of Market Week in Review, Global Chief Investment Strategist Paul Eitelman assessed the health of the U.S. economy amid the ongoing government shutdown. He also dug into political developments around the globe and recapped recent market performance.
Beyond the Void
Eitelman began by noting the government shutdown in the United States is now in its second week, with Congress unable to agree on a new funding bill. As a result, the release of key reports used to gauge the economy’s health—including September’s jobs report—has been delayed.
“The U.S. is effectively in a data blackout until the shutdown ends. However, private-sector data suggests the economy is still chugging along,” Eitelman said. As evidence, he pointed to the latest composite PMI (purchasing managers’ index) survey for the U.S. That reading indicates modest growth in both the manufacturing and services sectors, Eitelman said, with signs business optimism is also picking up. Meanwhile, the U.S. labor market still looks to be at a stalemate, characterized by weak hiring and low turnover rates.
Eitelman said the data void should be filled soon, with third-quarter earnings season beginning next week. “While consensus expectations are for 9% earnings growth in the S&P 500, I wouldn’t be surprised if that number comes in higher,” he remarked. Either way, a healthy earnings season would bolster the economy and help keep layoffs at bay, Eitelman stated.
New Bosses
Shifting his gaze to global politics, Eitelman noted Sanae Takaichi will likely become Japan’s first female prime minister later this month. Takaichi beat out other candidates from the ruling Liberal Democratic Party in a recent vote and is expected to be sworn in by the Japanese legislature later this month.
“Takaichi campaigned on an expansionary fiscal policy, which markets see as positive for equities but negative for the yen and long-term government bonds,” Eitelman remarked.
Moving to France, he said the country’s new prime minister resigned Monday after less than a month in office, suggesting France is headed for new parliamentary elections.
“The major political parties in France are aligned on the need for spending cuts but haven’t been able to agree on how much belt tightening is needed—or the specific policies to put in place,” Eitelman explained. He noted French stocks fell in the aftermath of the news before recovering as the week progressed.
Markets March On
Circling back to the U.S., Eitelman said the stock market remains unfazed by the closure of the federal government.
“The S&P 500 and Nasdaq both set new all-time highs on Wednesday and could potentially rise higher if earnings season gets off to a strong start next week,” he said. Eitelman stressed that the market’s reaction since the shutdown began is not unusual, with the S&P posting positive gains during the last six government closures.
A message from Advisor Perspectives and VettaFi: Discover something new! Click here to register for our upcoming webcasts.
These views are subject to change at any time based upon market or other conditions and are current as of the date at the top of the page. The information, analysis, and opinions expressed herein are for general information only and are not intended to provide specific advice or recommendations for any individual or entity.
This material is not an offer, solicitation or recommendation to purchase any security.
Forecasting represents predictions of market prices and/or volume patterns utilizing varying analytical data. It is not representative of a projection of the stock market, or of any specific investment.
Nothing contained in this material is intended to constitute legal, tax, securities or investment advice, nor an opinion regarding the appropriateness of any investment. The general information contained in this publication should not be acted upon without obtaining specific legal, tax and investment advice from a licensed professional.
Diversification and strategic asset allocation do not assure a profit or guarantee against loss in declining markets.
Please remember that all investments carry some level of risk, including the potential loss of principal invested. They do not typically grow at an even rate of return and may experience negative growth. As with any type of portfolio structuring, attempting to reduce risk and increase return could, at certain times, unintentionally reduce returns.
The Russell Investments logo is a trademark and service mark of Russell Investments
The information, analyses and opinions set forth herein are intended to serve as general information only and should not be relied upon by any individual or entity as advice or recommendations specific to that individual entity. Anyone using this material should consult with their own attorney, accountant, financial or tax adviser or consultants on whom they rely for investment advice specific to their own circumstances.
Products and services described on this website are intended for United States residents only. Nothing contained in this material is intended to constitute legal, tax, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. The general information contained on this website should not be acted upon without obtaining specific legal, tax, and investment advice from a licensed professional. Persons outside the United States may find more information about products and services available within their jurisdictions by going to Russell Investments' Worldwide site.
Russell Investments is committed to ensuring digital accessibility for people with disabilities. We are continually improving the user experience for everyone, and applying the relevant accessibility standards.
Russell Investments' ownership is composed of a majority stake held by funds managed by TA Associates Management, L.P., with a significant minority stake held by funds managed by Reverence Capital Partners, L.P. Certain of Russell Investments' employees and Hamilton Lane Advisors, LLC also hold minority, non-controlling, ownership stakes.
Frank Russell Company is the owner of the Russell trademarks contained in this material and all trademark rights related to the Russell trademarks, which the members of the Russell Investments group of companies are permitted to use under license from Frank Russell Company. The members of the Russell Investments group of companies are not affiliated in any manner with Frank Russell Company or any entity operating under the "FTSE RUSSELL" brand.
© Russell Investments Group, LLC. 1995-2025. All rights reserved. This material is proprietary and may not be reproduced, transferred, or distributed in any form without prior written permission from Russell Investments. It is delivered on an "as is" basis without warranty.
© Russell Investments
Read more commentaries by Russell Investments
