New York morning: shutdown vs. statistics - investors left without key data

Daily review and forecast of events on the U.S. stock market from Mikhail Denislamov, Deputy Director of Freedom Capital Markets Research.

The key event today was supposed to be the announcement of the September report on the U.S. labor market, but due to the ongoing government shutdown, the publication of all data from the Bureau of Labor Statistics (BLS), including the change in the number of employed (Nonfarm Payrolls), unemployment rate and wage dynamics, has been postponed indefinitely. This information vacuum forces investors to shift all their attention to the few macroeconomic indicators that will be published by private organizations.

As a result, the main releases of the day will be indices of business activity in the services sector. First of all, it is the index from ISM for September. Consensus forecast assumes its slight decrease to 51.7 points from 52 in August. There is a favorable balance of risks. The below-forecast data may increase the market's expectations of further easing of the Fed's policy, as it will be another signal of cooling of the economy. In this case, the "bad news is good news" scenario will work, and the stock market may react with growth. However, if the index turns out to be higher than expected, it will improve the assessment of economic trends, which may also support the indices.

The second important indicator will be the final estimate of PMI in the services sector from S&P Global. The preliminary value was 53.9 points, and investors will be closely watching whether the final report will confirm this rather strong assessment. Both indices together will give the market the most complete picture of the state of the services sector in the absence of official statistics.

The political agenda remains tense. Today, the Senate is scheduled to vote on funding the government, the next one will be held on October 6. At the same time, the White House continues to increase pressure: Donald Trump has warned of possible layoffs of government employees, and, according to CNN, the administration is already preparing a list of agencies that could be cut. Prolonged uncertainty and escalating rhetoric may begin to have a more noticeable negative impact on investor sentiment.

No significant corporate reports are scheduled for today.

Futures on US indices show about zero dynamics. We assess the balance of risks as neutral with moderate volatility. We focus on S&P 500 fluctuations in the range of 6690-6760 points (from -0.4% to +0.7% of the previous session's closing level).

- The shares of Rumble media platform (RUM) are growing by more than 12% on the pre-market. The driver was the news about the conclusion of a strategic partnership with Perplexity, a company working in the field of artificial intelligence. The market sees this deal as an opportunity for Rumble to gain access to new technologies and monetization channels, which was received with great optimism by investors.

- Shares of American OutdoorBrands (AOUT) show an increase of more than 5% in extended trading. The company announced the launch of a share buyback program worth $10 mln. This step was perceived by investors as a signal of management's confidence in the undervalued securities and financial stability of the company.

- Aqua Metals (AQMS) shares are under pressure in the premarket, losing more than 5%. Negative reaction followed the news about registration of additional shares issue for current holders.

- Shares of Eos Energy Enterprises (EOSE) show multidirectional movements amid news that the company has filed documents for the placement of 7.33 million new common shares. Such moves are usually viewed negatively by investors due to equity dilution. Since the beginning of June, the stock has grown by about 200%.

Trades on October 2 on American stock exchanges ended with growth. S&P 500 added 0.06%, Nasdaq 100 rose by 0.37%, Dow Jones rose by 0.17%, and Russell 2000 - by 0.66%. The session was quiet amid a lack of significant drivers, with investors still reacting weakly to the ongoing government shutdown. The materials sector (XLB: +1.16%) was the leader on the back of rising industrial metals prices. The energy sector (XLE: -1.01%) was the outsider, hurt by lower global oil prices. Among the "Magnificent Seven" stocks, multidirectional dynamics were observed. Tesla shares (TSLA: -5.11%) came under heavy pressure. The drop was driven by negative investor sentiment following the release of delivery data, which, while significantly beating expectations (497,000 vs. forecast 443,000), raised questions about the sustainability of the sales pace going forward. Part of this surprise was due to the expiration of tax credits in the US - buyers rushed to make deals.

The main topic of the day remained the US government shutdown, which continues for the second day. There is no visible progress in the negotiations. Despite reports that lawmakers from both parties are exploring possible compromises, any agreement is likely to require mutual concessions and approval from Donald Trump. The White House is ramping up the pressure by threatening to suspend $18 billion in infrastructure spending and lay off thousands of federal employees - moves that some observers are calling unprecedented. The stock market's reaction to what is happening remains subdued, as investors still regard the situation as "political noise" rather than a serious threat to the economy.

As a direct consequence of the shutdown, the publication of important economic statistics was delayed. In particular, on October 2, the official data of the U.S. Ministry of Labor on initial applications for unemployment benefits were not published, the release of which was suspended until the resumption of government work. In this regard, alternative data on the state of the labor market, first of all, the report on employment in the private sector from ADP became especially important for investors.

- The launch of a new licensing program for mortgage lenders triggered a sharp rise in FICO stock (FICO: +18.0%). The new strategy, which involves a 50% reduction in credit scoring prices, was seen by investors as a move that could significantly expand its customer base. The same news put strong pressure on the securities of its competitor, TransUnion (TRU: -10.6%), amid concerns about the loss of market share.

- Confirmation of rumors about the full takeover of OxyChem by Berkshire Hathaway led to a decline in Occidental Petroleum (OXY: -7.3%). The $9.7 bln deal will be fully paid in cash. Investors regarded the loss of this asset as a negative factor for future growth.

- The prospect of entering a new data center market has supported SunRun (RUN: +4.4%) shares. According to a publication in The Information, the company's batteries could potentially be used to power data centers, significantly expanding its long-term addressable market.

- Investor optimism about the company's development portfolio drove Absci Corp. shares (ABSI: +13.4%) higher. The positive reaction was driven by expectations of early data on a key drug for the treatment of inflammatory bowel disease, as well as long-term potential in the company's new niche - alopecia therapeutics.

This article was AI-translated and verified by a human editor