Both the S&P 500 ETF (SPY) and the Nasdaq 100 ETF (QQQ) secured new record highs on Wednesday, brushing off any fear of an extended government shutdown.
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The shutdown has reached its eighth day, matching the average duration of previous federal closures. The longest shutdown lasted 35 days and began in December 2018 over a border wall funding dispute. Both Democrats and Republicans attempted to pass a funding extension bill today, although the Senate rejected the two bills as the path to reopening remains clouded.
“Republicans are shutting down the government because they refuse to fix and address the crisis in American health care,” said Senate Minority Leader Chuck Schumer before the voting process began.
Both indexes got a lift after Wells Fargo raised its 2025 real gross domestic product (GDP) growth estimate to 2.0% and its 2026 estimate to 2.3% on the back of stronger-than-expected consumer spending. In September, the Commerce Department revised its second quarter consumer spending growth estimate to 2.5% from 1.6%, while August saw a monthly uptick of 0.6%. Wells Fargo also expects four additional rate cuts through the first half of 2026.
Amid warnings of a stock market bubble from prominent Wall Street voices, including Ray Dalio and Paul Tudor Jones, Goldman Sachs chief global equity strategist Peter Oppenheimer believes that there are “key differences” between the current market environment and conditions seen in previous bubbles.
Oppenheimer points out that market bubbles typically emerge when the total value of companies linked to a new technology far exceeds the cash flows they’re capable of generating — a scenario he doesn’t believe reflects today’s market. In addition, he believes that the rally in AI companies is supported by strong balance sheets and fundamentals. At the same time, Oppenheimer cautions that AI valuations are “becoming stretched” and recommends a diversified portfolio strategy.
Finally, rate cut odds at the October and December Federal Open Market Committee (FOMC) meetings slightly fell after the Fed released its minutes from the September meeting. The minutes noted that most members of the committee expect at least two more rate cuts by the end of 2025, with some expecting three more. In addition, a majority of members believe that unemployment risk has increased since the July FOMC meeting.
The S&P 500 (SPX) closed with a 0.58% gain, while the Nasdaq 100 (NDX) returned 1.19%.
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