Stocks Fall as US Reopens Amid Cloudy Fed Outlook

Sam Stovall, Chief Investment Strategist at CFRA Research, shares his year-end S&P 500 target and his thoughts on the US economy.

Wall Street traders bracing for a wave of economic releases after the US shutdown ended drove stocks and bonds lower on concern over whether the data will be able to clear the path for a Federal Reserve rate cut.

With much of the optimism about the government reopening already priced in, the S&P 500 wiped out its November advance. A slide in big tech weighed heavily on trading. Treasury yields climbed across the curve as money markets projected about even odds of a central bank reduction in December.

President Donald Trump signed legislation to end the longest government shutdown in US history. However it could still take days, or even weeks, for the federal bureaucracy to fully restart and dig out of the backlog after being closed since Oct. 1.

The Bureau of Labor Statistics is expected to publish a calendar in the coming days with updated release dates for delayed data. The October jobs report will be released without a reading of the unemployment rate, Trump’s top economic adviser Kevin Hassett told Fox News.

“The gears of the government should be working again soon, and while that is a relief for markets and the economy, there is still plenty of uncertainty, particularly around the missed inflation and jobs data and how these fronts have been faring,” said Carol Schleif at BMO Private Wealth.

Schleif says she would not be surprised to see some market chop over the coming weeks as the government gears and economic data presses get turning again. While she still expects a rate cut in December, she notes the data blackout has made the Fed’s job difficult.

The S&P 500 fell to around 6,800. A gauge of megacaps sank 1.5%. Cisco Systems Inc. soared on an upbeat forecast.

The yield on 10-year Treasuries climbed four basis points to 4.11%. That’s ahead of a $25 billion sale of 30-year bonds. The dollar edged lower. Oil recovered as traders weighed the outlook for a record surplus against supply risks from US sanctions.

The jobs report is composed of two surveys — one of businesses, which produces the main payrolls number, and another of households, which is responsible for the unemployment rate. While many businesses retain their records and report the data themselves electronically, reaching workers over the phone and asking them to recall their employment status for a particular week in October would be more difficult to conduct retroactively.

White House Press Secretary Karoline Leavitt said Wednesday that the October jobs report as well as consumer price index would “likely never” be released. However, she didn’t clarify whether she was referring to the entire jobs report or just part of it.

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