[New York Stock Exchange] All Major Indices Fall Despite Shutdown Ending... Worst Day in a Month on Missing Jobs Data and Fading Rate Cut Hopes

Shutdown Ends After 43 Days, But Key Data Still Missing
White House: "October Jobs Report Will Exclude Unemployment Rate"
Hawkish Fed Comments Cloud Rate Path
December Outlook: 50% Cut vs. 50% Hold
Tech Stocks Plunge Amid Overvaluation Concerns

On the 13th (local time), all three major indices of the New York Stock Exchange ended lower. Despite the fact that the longest-ever federal government shutdown, which lasted 43 days, ended the previous night, concerns over a gap in economic data and weakened expectations for interest rate cuts weighed on investor sentiment. As risk appetite receded, technology stocks-especially those related to artificial intelligence (AI) that had been subject to overvaluation debates-fell sharply.

On the 13th (local time), a trader is working on the trading floor of the New York Stock Exchange (NYSE) in the United States. Photo by AFP Yonhap News

On this day in the New York stock market, the blue-chip Dow Jones Industrial Average closed at 47,457.22, down 797.6 points (1.65%) from the previous trading day. The S&P 500 Index, which focuses on large-cap stocks, dropped 113.43 points (1.66%) to 6,737.49, while the tech-heavy Nasdaq Index slid 536.102 points (2.29%) to finish at 22,870.355. All three indices recorded their worst day since October 10.

Investors were relieved by the end of the shutdown, which had been eroding economic growth. The House of Representatives passed a revised temporary budget bill, which had cleared the Senate on the 10th, and with President Donald Trump's signature, the shutdown officially ended after 43 days.

However, market anxiety resurfaced after the White House suggested that October unemployment statistics might be missing. Kevin Hassett, Chairman of the White House National Economic Council (NEC), said in a Fox News interview, "We were unable to conduct household surveys in October, so we will receive a partial employment report," adding, "Job-related figures will be released, but the unemployment rate will be excluded."

The October employment report, originally scheduled for release on the 7th, was delayed due to the shutdown that began on October 1. Furthermore, with statistical collection halted for over a month as employees were on leave, it has become difficult to announce the unemployment rate.

Amid signs of a slowdown in the labor market, there were high expectations for a rate cut in December. However, concerns that the Federal Reserve may have to conduct monetary policy in the dark due to the absence of key indicators further pressured investor sentiment.

Additionally, a series of hawkish comments from Federal Reserve officials also dampened hopes for further rate cuts within the year.

Alberto Musalem, President of the Federal Reserve Bank of St. Louis, said, "While ensuring that monetary policy does not become excessively accommodative, there is limited room for further easing," and added, "We need to proceed cautiously in future policy decisions." This effectively supported the case for a rate freeze in December. Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, also commented, "Some sectors of the U.S. economy are doing fine, but parts of the labor market appear to be under pressure," while noting, "The inflation rate remains at around 3%, which is still too high." Although he had previously predicted three rate cuts by the end of the year, he has now taken a more hawkish stance, withholding his view on the direction of rates in December.

With continued hawkish remarks from within the Federal Reserve and the additional issue of missing key indicators, expectations for a December rate cut are receding further. According to the CME FedWatch tool, the market is currently pricing in a 48.4% probability that the Fed will keep rates unchanged at the current 3.5-3.75% in December, and a 51.6% chance of a 0.25 percentage point cut. It is essentially a coin toss.

Matt Maley, Chief Market Strategist at Miller Tabak, said, "This is an expensive market, and to justify today's high valuations, rates need to be lower," adding, "With the end of the shutdown, a flood of economic data may be released simultaneously, which could quickly shift market sentiment. This increases uncertainty and, in turn, drives the market into fear."

Carol Schleif, Chief Investment Officer at BMO Private Wealth, said, "The resumption of government operations brings relief to the market and the economy," but added, "There is still significant uncertainty about missing inflation and employment data and how these sectors are performing."

By sector, technology stocks were broadly weak. Nvidia plunged 3.58%. Broadcom fell 4.29%, Oracle dropped 4.15%, and Palantir slid 6.53%. Walt Disney tumbled 7.75% after its quarterly sales missed Wall Street expectations.

U.S. Treasury yields are on the rise. The benchmark 10-year Treasury yield climbed 3 basis points (1bp = 0.01 percentage point) from the previous day to 4.09%, while the 2-year Treasury yield, which is sensitive to monetary policy, rose 2 basis points to 3.59%.