Stock investors are watching for 3 updates this week as the government shutdown drags on

The ongoing government shutdown is creating a data vacuum for investors, who are now scrutinizing a limited set of available economic indicators this week. Key focuses include a series of Fed speaker remarks, including Chair Powell, and the release of FOMC minutes, which are expected to reveal potential divisions on rate cut projections amid a delayed September jobs report. Investors are also monitoring alternative labor market data for signs of weakening and anticipating a decline in consumer sentiment, highlighting a period of uncertainty before the upcoming third-quarter earnings season.

Analysis

The government shutdown has left investors in the dark when it comes to economic data. - The market is focusing its attention on a few indicators that are visible this week. - On the docket are a bunch of Fed speakers, an update to the job market, and consumer sentiment data. The government shutdown has put markets in a weird spot. On the one hand, no news is good news, and the absence of a key jobs report on Friday did little to derail the continued march to record highs. On the other hand, investors are somewhat in the dark until the government reopens. Luckily, a few updates are still trickling through. With the shutdown's chaos expected to extend into this week, investors will be turning to a handful of sources to make sense of the economic picture. Here's what's on the agenda. FOMC minutes and a roster of Fed speakers There's a long lineup of Fed speakers set to deliver remarks throughout the week. | Monday | Tuesday | Wednesday | Thursday | Friday | | Jeff Schmid, Kansas City Fed President | Raphael Bostic, Atlanta Fed President Stephen Miran, Fed Governor | Fed minutes release Alberto Musalem, St. Louis Fed President Michael Barr, Fed Governor | Jerome Powell, Fed Chair Michelle Bowman, Fed Vice Chair Neel Kashkari, Minneapolis Fed President Michael Barr, Fed Governor Mary Daly, San Francisco Fed President | Austan Goolsbee, Chicago Fed President | Investors will be paying close attention to commentary from top central bank officials as markets get ready for the central bank's policy meeting at the end of this month. The delayed September jobs report is a key data point that feeds into the Fed's outlook for rate cuts, and investors will be listening for clues about how the Fed might act in the absence of new data on the labor market. The central bank will also release the meeting minutes from its last policy meeting on Wednesday. That's expected to give investors a peek into how the FOMC is thinking about inflation, the job market, and the path of interest rates through the end of the year. "We expect the September FOMC minutes to lay bare significant divisions on the committee. In parsing the minutes, we will be looking to understand why the Fed projected deeper cuts than in June despite moving to more hawkish macro forecasts," analysts at Bank of America wrote on Friday. The bank said it expected only another 25 basis points worth of rate cuts for the rest of Powell's term, which ends next May. "But the risk is that the Fed will over-ease because it is slow to accept the labor supply story," the analysts said. "Absent labor market news alleviating concerns, it thus remains likely that a second move will be delivered this month. However, further easing is not assured, particularly against a backdrop of data darkness and a continued easing in US and global financial conditions," economists at JPMorgan wrote in a note on Friday. A job market update Investors will be left hanging on official jobs data until the government re-opens, but public data that feeds into the jobs report is still being updated. Haver Analytics is due to release claims data this Friday, which should be "closely watched for any uptick in layoffs," BofA analysts said. In a note to clients, Goldman Sachs economists said they expected federal worker firings to "weigh meaningfully" on October's jobs data. That's due to the government's deferred resignation program, which allows employees to take administrative leave before resigning at a later date. Most resignations in the program were scheduled for Sept. 30, the bank said. "One of the shortcomings of alternative job growth data is that they generally lack visibility into government hiring trends," the economists wrote. Other indicators have pointed to a weakening job market. US job openings fell 17% year-over-year last month, according to the workforce intelligence firm Revelio Labs. Meanwhile, Challenger, Gray & Christmas data showed that hiring plans had slowed to their slowest pace since 2009, while firing plans sped up to their fastest pace since the pandemic. Consumer sentiment Investors will also get preliminary consumer sentiment data for the month of October this week. Economists are expecting the University of Michigan's sentiment gauge to decline to a level of 53.5, down from last month's reading of 60.4. In a note to clients on Monday, Morgan Stanley said its gauge of consumer confidence had improved slightly in the last month to a net level of -10%, up from the prior -16% reading. "However, this remains below the +23% recorded in January, suggesting that while sentiment is improving, it has yet to fully rebound to early-year levels," strategists wrote. "This week will be light on data on the economic and earnings front," Art Hogan, the chief market strategist at B. Riley Wealth Management, wrote in a note on Monday. "But it is the calm before the storm," he said, pointing to the first wave of third-quarter earnings kicking off next week. The ongoing government shutdown has created a significant data vacuum, forcing market participants to recalibrate their focus towards a limited set of available economic indicators and Federal Reserve communications. This week is defined by a dense schedule of Fed speakers, including Chair Powell, and the Wednesday release of the September FOMC minutes, which Bank of America analysts expect will reveal "significant divisions" on the committee's rate cut projections. The absence of the official jobs report intensifies scrutiny on Fed commentary regarding how it might proceed amid this data darkness, with JPMorgan noting that while another rate cut this month is "likely," further easing is "not assured." Meanwhile, alternative data points to a deteriorating labor market, evidenced by a 17% year-over-year decline in job openings reported by Revelio Labs and Challenger, Gray & Christmas data showing hiring plans at the slowest pace since 2009. Compounding this negative outlook is the expectation that the University of Michigan's consumer sentiment gauge will fall to 53.5 from 60.4, underscoring a fragile consumer outlook as the market enters what B. Riley Wealth calls the "calm before the storm" of third-quarter earnings.

Key Decisions for Investors

• Monitor all Fed speaker commentary and the FOMC minutes with heightened scrutiny, as the absence of official jobs data elevates the risk of a monetary policy miscalculation or surprise.
• Investors should assign greater weight to alternative labor market indicators, such as weekly claims and private sector reports, which currently signal a weakening trend that official data has yet to confirm.
• Given the expected decline in consumer sentiment and the overall data uncertainty, it may be prudent to adopt a cautious stance, particularly in consumer-discretionary sectors, until the upcoming Q3 earnings season provides clearer fundamental guidance.