The US equities market had losses last week, despite the major indexes reaching new record highs early on. The Dow Jones, S&P 500, and Nasdaq all closed 0.15 to 0.65% lower, with US Treasury bond yields 1 to 7bps higher and credit spreads around 2 to 5bps wider. The Dollar index DXY traded stronger, closing the week +0.5%.
The early market's gains were driven by the Fed's first rate cut of the year, continued strong consumer spending after a stronger 2Q GDP revision, contained PCE inflation data, and positive news on AI, with Nvidia and OpenAI announcing a strategic partnership. However, the week ended on a negative tone, as concerns about stretched valuations, potential quarter-end portfolio adjustments, and implications of new tariffs began to take hold.
Better tone towards equities to start the new week, despite concerns about a potential US government shutdown tomorrow, September 30th. While this is not a debt ceiling crisis, it would halt funding for some federal agencies from Congress. If a shutdown occurs, jobless claims and Payroll data releases this week will likely be postponed. The previous shutdown, during 2018–2019 (and lasting from December 22 to January 25), did generate a selloff in equities.
