Profit Insights

**U.S. Equity Markets Extend Rally Amid Shutdown**

On Friday, October 3, 2025, the S&P 500 and Dow Jones Industrial Average both closed at record highs, underscoring resilient investor optimism despite the U.S. government shutdown entering its third day. The Dow advanced 238.56 points (0.51%) to 46,758.28, while the S&P 500 inched up 0.44 points (0.01%) to 6,715.79. By contrast, the Nasdaq Composite fell 63.54 points (0.28%) to 22,780.51, weighed down by a pullback in major tech names. For the week, the Dow and S&P 500 each gained 1.1%, and the Nasdaq rose 1.3%, with trading volume at 20.47 billion shares compared with a 20-day average of 19.01 billion ([reuters.com](https://www.reuters.com/world/africa/wall-street-futures-climb-final-session-volatile-week-2025-10-03/)).

Sector breadth was mixed. Utilities led the S&P 500 sectors with a 1.2% gain, while the technology sector eased after Applied Materials warned of a $600 million hit to fiscal 2026 revenue, dragging its shares down 2.7%. Tesla also fell 1.4%, reflecting profit-taking in high-flying stocks ([reuters.com](https://www.reuters.com/world/africa/wall-street-futures-climb-final-session-volatile-week-2025-10-03/)). Meanwhile, small-cap and growth-oriented stocks outperformed slightly on the week, as investors rotated into areas perceived to be less rate-sensitive ahead of further data releases.

**Economic Data in Focus: ISM Services PMI and Payroll Delay**

With the government shutdown delaying the closely watched nonfarm payrolls report for September, markets turned to private and survey-based data. The Institute for Supply Management’s non‐manufacturing PMI dropped to 50.0 in September—the breakeven level between expansion and contraction—from 52.0 in August. New orders in the services sector slowed markedly to 50.4 from 56.0, and the ISM employment gauge remained in contraction at 47.2, marking the fourth straight month of labor weakness. Meanwhile, the ISM’s prices-paid index edged up to 69.4, signaling persistent cost pressures ([reuters.com](https://www.reuters.com/business/us-services-sector-stalls-new-orders-slow-crawl-employment-weak-2025-10-03/)).

In lieu of official jobs data, the ADP National Employment Report showed private payrolls declined by 32,000 in September, reinforcing the narrative of labor market moderation ([reuters.com](https://www.reuters.com/world/africa/wall-street-futures-climb-final-session-volatile-week-2025-10-03/)). The service-sector slowdown and payroll weakness bolstered expectations for further Federal Reserve rate cuts later this year.

**Fed Rate Cut Odds and Investor Positioning**

According to the CME Group’s FedWatch Tool, traders see near-certainty (100%) of a 25 basis-point cut at the Fed’s October meeting and an 84% probability of an additional cut in December. This outlook is underpinned by softer private-sector hiring, ISM data stalling at breakeven, and delayed official jobs numbers ([reuters.com](https://www.reuters.com/world/africa/wall-street-futures-climb-final-session-volatile-week-2025-10-03/)). Dallas Fed President Lorie Logan’s cautionary stance on further cuts was noted but failed to dent rate-cut expectations broadly.

Fund flows reflect this sentiment shift: U.S. equity funds recorded net inflows of $36.41 billion for the week ending October 1—the largest weekly haul since November 2024. Large-cap funds dominated with $40.75 billion in purchases, while small- and mid-cap funds saw outflows of $2.59 billion and $2.28 billion, respectively. Technology sector funds rebounded with $3.04 billion in inflows. Conversely, bond funds experienced $1.58 billion in outflows, halting a 23-week streak of net purchases, with short-to-intermediate U.S. government and Treasury funds seeing the largest withdrawals since January 2022 at $9.37 billion. Money market funds attracted $47.08 billion, their highest weekly inflow in a month ([reuters.com](https://www.reuters.com/business/us-equity-funds-see-sharp-weekly-inflows-rate-cut-hopes-2025-10-03/?utm_source=openai)).

**Currency and Cryptocurrencies: Dollar Retreats**

The U.S. dollar retreated on renewed shutdown-related uncertainty and data gaps, posting multi-week losses against major peers. The dollar index fell 0.1% to 97.69, its worst weekly showing since July. The euro rose 0.2% to $1.1743, marking its best week in a month, while sterling gained 0.3% to $1.3479. The yen, after earlier highs, pulled back to 147.41 per dollar. Investor caution over the prolonged shutdown and delayed data releases weighed on the greenback, even as markets continued to bet on Fed easing ([reuters.com](https://www.reuters.com/world/middle-east/yen-trims-weekly-advance-investors-weigh-boj-election-impacts-2025-10-03/)).

In cryptocurrencies, Bitcoin climbed for an eighth consecutive session, reaching $122,164.19—a level not seen since mid-August—buoyed by gains in equity markets and renewed inflows into Bitcoin exchange-traded funds ([reuters.com](https://www.reuters.com/world/middle-east/yen-trims-weekly-advance-investors-weigh-boj-election-impacts-2025-10-03/)).

**Commodity Markets: Oil Ends Week Lower**

Oil prices edged higher on Friday but were on course for their biggest weekly decline since early October, down about 7–8%. Brent crude rose 0.67% to $64.54 per barrel, while U.S. West Texas Intermediate futures gained 0.76% to $60.94. The prospect of increased OPEC+ supply—potentially up to 500,000 bpd more in November—continued to cap gains, as global stocks of crude and refined products remain elevated ([ewfpro.com](https://www.ewfpro.com/index.php/en/commodity/132-precious-metal-energy/energy/market-update-oil/96931-oil-prices-head-for-weekly-loss?utm_source=openai)).

Onshore, a large fire at Chevron’s El Segundo, California, refinery disrupted jet fuel and gasoline production. The 285,000 bpd facility—the second-largest in California—took multiple units offline after a blaze in its jet fuel unit. While no injuries were reported and the fire was extinguished, gasoline prices in California were expected to rise by 5–15 cents per gallon, already among the highest nationally, and jet fuel costs surged by 33 cents per gallon on Friday afternoon ([reuters.com](https://www.reuters.com/world/us/fire-breaks-out-chevrons-refinery-el-segundo-la-times-says-2025-10-03/)).

**Looking Ahead: Data Gaps and Upcoming Catalysts**

With official September payrolls still pending due to the shutdown, markets will turn to the University of Michigan’s preliminary October sentiment index on Friday and scheduled Treasury auctions of $58 billion in 3-year, $39 billion in 10-year, and $22 billion in 30-year notes. The lack of reliable domestic data has elevated the importance of private and survey-based metrics, while global events—such as OPEC+ decisions this weekend, Bank of Japan leadership elections, and New Zealand’s rate-cut decision on October 8—are poised to influence market dynamics ([reuters.com](https://www.reuters.com/business/take-five/global-markets-themes-graphic-2025-10-03/)).

Overall, despite political gridlock in Washington, markets remain buoyed by expectations of Fed easing, strong corporate earnings projections (with Q3 growth forecasts rising to 8.8%), and seasonal strength. Nonetheless, prolonged data blackout risks clouding investor visibility and could inject renewed volatility if shutdown drags on ([reuters.com](https://www.reuters.com/business/wall-st-week-ahead-wall-st-eyes-washington-standoff-with-stocks-near-records-2025-10-03/?utm_source=openai)).