Market Movements: Analyzing the Impact of the Government Shutdown on U.S. Stocks

Let's get to the big story breakdown on this Tuesday morning, we are looking at a mixed open for US stock futures.

Now tech stocks roared out of the gate to start the week as investors cheer the move toward ending the record government shutdown.

Markets rallied on hopes that the shutdown may soon end.

The prolonged shutdown has weighed heavily on consumer confidence, as well as the economy.

Now joining me to weigh in this morning is Michael Rankin, senior market strategist at the New York Stock Exchange.

Good morning, Michael.

Thank you so much for joining me.

Good morning.

Thanks for having me back.

Well, here we are looking at a mixed open for US equity futures.

So tell us what's happening, especially following yesterday's rally.

Yeah, so I mean yesterday, you know, if you think back to last week, right, we had some pretty significant weakness in the back half of the week and a lot of the, some of the major tech names.

We got a pretty significant, kind of technical bounce yesterday and you know, along with some optimism kind of around the ending of the government shutdown.

We saw a lot of those stocks. bounced back significantly.

And then this morning we've had a couple of pieces of news.

So you've had the ADP jobs report or the ADP new weekly jobs report which showed that there was a pretty significant slowing of hiring in the back half of October, right?

So you know that that kind of reintroduces some of the questions around the strength of the economy because we were just talking off camera, right, that bond markets are closed for the holiday. today, but you can look at Treasury futures contracts, right, and they're suggesting kind of the 10 years down about 4 to 5 basis points, you know, kind of in response to that.

So we saw a pretty significant move on that front and then we've also had a couple of negative headlines, you know, within the tech space, right?

We had core weave earnings last night, you know, kind of where they kind of took out took down some of their cap numbers for next year and kind of, you know, basically just kind of suggested that there's that they Is a little bit of a slowdown in bringing kind of capacity online and they're seeing kind of a slowdown of the third party you know that's been doing construction for them and that's kind of pushing out some of their numbers, right?

We had SoftBank overnight announced that they were kind of liquidating positions within Nvidia and things of that nature, right?

So you have a couple of kind of headwinds from the tech space that are also way.

Yeah, and I'm glad you brought that up because there are a lot of.

Parts here and we've been paying attention to those key AI names, but we'll be waiting for some key earnings, especially out of Nvidia at the end of this month.

So as we eagerly await those economic data points once the shutdown comes to an end, what will you be paying attention to?

So, so in terms of AI, right, so today we actually have AMD has, has an event which starts this afternoon, so that'll be kind of something to pay attention to.

We have a couple other tech earnings throughout.

Cisco, aim at, and then as we look forward to next week, clearly you know kind of Nvidia will be very much at the forefront, right?

I mean, it's very interesting because you know this it's almost exhausting already having this like conversation about is AI a bubble, is AI not a bubble right and we're just starting, right?

And so you know that's going to be something that's going to that we're going to have to kind of wrestle with, you know, at least for kind of the next 6 to 12 months, you know, in terms of um you know kind of the government.

Shutdown ending, we're going to start to get economic data in the coming weeks.

That data is going to be pretty sloppy right as like, you know, it's unclear in terms of you know exactly when we're going to get it, if there's going to be look back data, you know what the data you know kind of looks like on a go forward basis.

I think markets will kind of if you look past that a little bit.

I think what it will do though is that that that that will probably give the Fed enough ammo.

To potentially cut in December, right, you know, though we'll have to see kind of, you know what the language is and you've kind of clearly heard that, you know, there's a little more cautious, you know, caution from the members of the committee, but you know that data might actually just kind of give them enough ammo to move forward at this.

Yeah, and you mentioned the Federal Reserve, of course all eyes are on that December meeting taking place for the central bank and as you mentioned, we'll have to wait and see to get those data points hopefully sooner rather than later.

We know what the Fed's next move will potentially be, but we've been hearing from Fed officials this week and there are more slated for their speaking this week.

So what are you paying attention to out from Fed officials?

So I mean what what we've really seen is that there is, you know, a divide and the question in terms of, you know, kind of what the proper path forward is, right? we kind of started.

Out hearing from the more hawkish contingent within the Federal Reserve, we've heard some of the more dovish kind of folks on the committee come out over the last couple of weeks.

I think a lot of the question revolves around where the ultimate neutral rate is right and kind of what the kind of potential impacts of continuing to have inflation running above target, you know.

With this, you know, kind of the slowing that we're seeing, right, I think like the the big takeaway from what I've heard, you know, kind of from officials is that you know there's some, everybody wants to move cautiously, right, like not everybody, but you know, there's there's a handful of folks that want to be really, really aggressive or one in particular, you know, but in general it seems like.

At this point, the committee just wants to kind of move with a little more caution, would like to see a little more data.

That data will be forthcoming, but I think it's going to take you know a month or two until we start to see something.

And finally, before I let you go for the S&P 500 in the short term, what levels are you watching?

Yeah, so I mean last week it was interesting, you know, kind of last Friday, right?

You had Bitcoin, right, which we've kind of talked about is. kind of being this leading indicator, you saw kind of Bitcoin break below the 100,000 100,000 level, retest the weekly lows, you know, kind of right around 99,000, but it started to bounce right and that bounce you kind of bled into equity markets, and we kind of retested that 50 day moving average or tested it and kind of broke below it briefly on Friday and then kind of rallied back.

We got kind of that bounce on Monday.

So you know that first level is kind of that.

Friday lows in that 50 day moving average and then it's like down pretty much like 100 points in as you move down 67, 50, 66, 50, 6550.

There are all some kind of key support levels and moving averages right in and around those levels.

So that's kind of what I'd be watching here in the.

OK, Michael, as always, thank you so much for joining me here on FinTech TV and as always, thank you so much for sharing all of your insights.

Thanks for having me.

Thank you.