'All news is good news': Wall Street shrugs off government shutdown, jobs report delay

US stock markets are reaching record highs, fueled by AI momentum and expectations of Federal Reserve rate cuts, even as a government shutdown delays critical economic data, including the September jobs report. This data void forces investors and policymakers to rely on less comprehensive private-sector metrics, complicating the Fed's outlook on monetary policy despite a prevailing market sentiment that views the absence of official negative news as conducive to continued gains, even amid warnings about potential AI-driven excess.

Analysis

Investors largely shrugged off the start of the US government shutdown, with the major indexes continuing to notch record highs as Wall Street leaned on AI momentum and expectations for further easing of interest rates by the Federal Reserve. The stock market rally, led by large-cap tech, comes even as Washington gridlock delays critical economic data, including the September jobs report. Without those figures, both investors and policymakers are flying blind, turning instead to private-sector readings that point to a sharper slowdown in the labor market. Yet the missing data hasn’t derailed the market’s recent record run. “There’s a certain amount of nihilism," Steve Sosnick, chief strategist at Interactive Brokers, told Yahoo Finance on Friday. "All news is good news, and no news matters. By not getting this [jobs report], that’s one less impediment in the market’s relentless rise.” That relentless rise comes even as questions mount over how long the optimism can last, with Amazon founder Jeff Bezos warning that today’s AI boom may be blurring the line between innovation and excess. Speaking at Italian Tech Week, Bezos said investors are funding “every experiment” — the good ideas and the bad — making it harder to separate lasting opportunities from hype. Still, he emphasized the underlying technology is real, predicting AI will enhance productivity and quality across nearly every industry. "We’re in a wonderful period right now where everybody’s so optimistic," said George Seay, founder and chairman of hedge fund Annandale Capital. "It’s really fun while it lasts, and enjoy it while it lasts. But eventually, these things all end at some point. Markets don’t go up forever.” Seay added that rather than trying to time the next downturn, investors should focus on getting allocations right and avoiding reactionary moves. “Investors should just ignore that and pick great companies or great ETFs or index funds and just leave it alone and do as little as possible,” he said. “The less they do, the better. Just get your allocation right, get it in place, and go live your life.” Still, the absence of official data amid the shutdown leaves the Federal Reserve in a difficult position, adding uncertainty around the path of rate cuts and the broader economy. Read more: How the government shutdown affects your student loans, Social Security, and more “It’s a real problem without the government data,” Kathy Jones, chief fixed income strategist at Charles Schwab, told Yahoo Finance on Thursday. “We have private-sector data that’s giving us some information, but it’s not at the level that the government data is. So we’re a little bit in the dark." Major US stock indexes are demonstrating a significant disconnect from macroeconomic fundamentals, reaching record highs driven by AI-related momentum and expectations of Federal Reserve easing, despite a government shutdown that has halted the release of critical economic data. According to Interactive Brokers' chief strategist, the market is exhibiting a form of "nihilism" where the absence of potentially negative news, such as the September jobs report, is perceived as a positive, fueling a "relentless rise." However, this optimism is met with explicit caution from industry leaders. Amazon founder Jeff Bezos warned that the AI boom may be fostering excess, with capital flowing indiscriminately to both viable and weak ventures, making it difficult to discern true long-term opportunities from hype. Similarly, Annandale Capital's chairman noted that while such optimistic periods are enjoyable, they are not perpetual. The core issue remains the data vacuum, which, as stated by Charles Schwab's chief fixed income strategist, leaves the Federal Reserve and investors "in the dark" and complicates the outlook for monetary policy, as private-sector data is not a sufficient substitute for comprehensive government statistics.

Key Decisions for Investors

• Investors should recognize that the current market rally is operating in a data vacuum, increasing the risk of a sharp correction once delayed economic reports are released and provide a clearer picture for Federal Reserve policy.
• When evaluating opportunities in the AI sector, it is crucial to perform rigorous due diligence to separate companies with strong fundamentals from those benefiting from speculative hype, given warnings about indiscriminate funding in the space.
• Consider maintaining a disciplined, long-term allocation strategy focused on high-quality assets, as expert commentary suggests avoiding reactionary trades based on short-term euphoria that may not be sustainable.