General outlook

U.S. markets showed resilience in recent days despite political noise in Washington and signs of economic cooling. 

The S&P 500 and the Dow Jones closed near record highs, supported by growing optimism over potential rate cuts by the Federal Reserve. The Nasdaq, meanwhile, had a more moderate performance as investors took profits after several strong weeks for big tech.

Overall sentiment remained positive, with lower Treasury yields and renewed expectations that the Fed could start easing before year-end, which benefited rate-sensitive sectors such as real estate, consumer discretionary, and utilities.

Key factors of the week

1. Tech momentum continues

Artificial intelligence and semiconductor stocks once again led the rally. AMD surged after announcing a new chip supply deal with OpenAI, reigniting enthusiasm around the AI ecosystem. 

Nvidia, Microsoft, and other major tech firms also held firm, while mid-cap names posted more modest gains.

2. Political risks persist

The lack of consensus over the federal budget kept the possibility of a prolonged government shutdown alive. While investors appear to have partially priced in this risk, delays in official data releases —such as employment and inflation reports— could increase uncertainty in the coming weeks. 

Analysts warn that an extended shutdown could impact consumer confidence and economic activity in Q4.

3. Treasury yields and rate expectations

The 10-year Treasury yield eased slightly, reflecting signs of slower economic activity. This supported rate-sensitive sectors and strengthened the narrative of a potential rate cut before the end of the year.

4. Commodities and safe havens

Gold remained near record highs as investors sought safety amid political tension and global uncertainty. Oil, meanwhile, was more volatile: prices climbed midweek on signs of lower U.S. supply but eased toward Friday due to global slowdown fears and OPEC+ production adjustments.

5. Weaker economic data

Labor market figures disappointed again, showing slower hiring, downward revisions to previous months, and an increase in jobless claims. 

These trends reinforced expectations that the Fed may soon shift toward a more accommodative stance.

Outlook

In the coming days, investors will be watching three key areas:

• The PCE price index, a key inflation gauge that will guide the Fed’s next steps.

• Corporate earnings in tech, health, and consumer sectors, which could confirm whether the market’s rally remains sustainable.

• The political situation in Washington, as a prolonged shutdown could trigger volatility.

Conclusion

Wall Street continues to balance two forces: the strength of technological innovation and the caution stemming from political and economic uncertainty. While sentiment remains broadly positive, confidence is still fragile and could shift quickly in response to new data or political developments.

The opinions in the preceding commentary are as of the date of publication and are subject to change.  Information has been obtained from third party sources we consider reliable, but we do not guarantee the facts cited are accurate or complete.  This material is not intended to be relied upon as a forecast or investment advice regarding a particular investment or the markets in general, nor is it intended to predict or depict performance of any investment. We may execute transactions in securities that may not be consistent with the report’s conclusions.  Investors should consult their financial advisor on the strategy best for them.  Past performance is no guarantee of future results. For illustrative purposes only. Does not represent an investment recommendation. For more information, please see our Social Media Disclosure.

Securities offered by Northbound Securities, LLC Member FINRA/SIPC 

Sources: Bloomberg, Reuters Energy, CNBC Markets, ISM Manufacturing Report