Here are the 3 big things we’re watching in the stock market this week
The federal government closed up shop last week. You might not have known that if the stock market’s performance was your guide: The S & P 500 finished the week at a record high on a six-day win streak . But the longer the shutdown in Washington drags on, the more attention Wall Street may start to give it. For now, the market calculus is relatively simple: a temporary shutdown is unlikely to materially alter the trajectory of the U.S. economy and corporate profits, considering that the hundreds of thousands of furloughed government workers will receive back pay once it is over. There is also an implicit bet that President Donald Trump ‘s threats of mass federal firings won’t come to fruition, or, if they do, they’ll be subject to drawn-out litigation. Sure, investors wish they were getting the usual flow of economic data from government agencies — especially the September jobs report — to help them forecast the Federal Reserve’s upcoming policy moves at its meetings in late October and December. But it’s not immediate trouble, as ADP’s private payrolls report and other data partially filled the void. A brief shutdown also doesn’t affect the Street’s favorite trade — all things artificial intelligence — which lifted the market higher through the political noise. AI chip king Nvidia , which turned modestly lower Friday, enters this week on a run of six positive sessions out of the past seven. The assumption underlying all this, of course, is that if the shutdown is short-lived, it will limit the economic damage. Whether that is the case — well, that’s up to the politicians in Washington who failed to reach an agreement on funding before midnight Wednesday, when the shutdown went into effect. It is certainly one of the biggest things for investors in the coming days. The other major things on our radar include an investor day for Honeywell’s soon-to-be-separated specialty chemicals business and a smattering of corporate earnings outside the Club’s portfolio. 1. Shutdown: As of Sunday morning, the government was still shut down. On Friday, the GOP-controlled Senate reconvened and took up spending proposals from Republicans and Democrats alike. They failed to pass . In the 100-seat Senate, 60 votes are needed to pass the spending bill. With Republicans holding a majority of 53 seats, they need some support from the Democratic caucus. As our CNBC colleagues have reported, a debate over enhanced subsidies for the Affordable Care Act is at the center of the shutdown fight . Both sides have largely dug their heels in. Republicans have gotten support on stopgap funding measures from Democratic Sens. John Fetterman of Pennsylvania and Catherine Cortez Masto of Nevada, as well as Sen. Angus King, a Maine independent who caucuses with the Democrats. But they still lack enough votes to reopen the government. At the White House, the Trump administration has announced funding freezes targeting Democratic-led cities and states, with Trump saying the shutdown is an “unprecedented opportunity” to cut Democratic priorities . The economic consequences of the shutdown will primarily stem from how long it lasts. But, as strategists at UBS said in a note to clients Friday, Trump’s threat of firing federal workers and cutting other spending programs “could amplify the downside effects.” They added, “Ultimately, these moves raise uncertainty: The number of employees who would be affected is not yet known, and, as with the [Department of Government Efficiency] firings and spending cuts earlier in the year, these moves would likely be subject to litigation.” 2. Solstice investor day: On Wednesday in New York, Solstice Advanced Materials is set to hold an investor day ahead of its planned separation from Honeywell . In a press release, Honeywell said the Solstice management team will “provide details on Solstice’s specialty businesses, future growth prospects and compelling financial model.” Based on our 400-share position in Honeywell, we’re currently on track to receive 100 shares of Solstice when the spin-off is complete on Oct. 30. For that reason, we’ll be tuned into the Solstice presentation to inform our next moves. Once Solstice is set free, the remaining Honeywell will consist of its crown jewel aerospace unit and its automation business — but only temporarily. The company is on track to slim down even further next year, spinning off the aerospace division. Honeywell has found itself in a spin purgatory of sorts ever since announcing its aerospace and automation breakup plans in February . (The Solstice plans came first, in October 2024.) We’re hopeful that each bit of progress toward these separations can help chip away at the stock overhang and allow the market to better value these businesses. 3. Earnings: While there are no Club names set to report, there are a few earnings reports of note that can help shape our understanding of the economy, tariff effects, and consumer spending. With the flow of official economic data impaired, the real-time commentary from CEOs and CFOs will be even more valuable than usual for investors. The reports to watch are Modelo and Corona brewer Constellation Brands on Monday night; spice maker McCormick on Tuesday morning; PepsiCo and Delta Air Lines on Thursday morning; and Levi Strauss on Thursday night. Week ahead Note: In the calendar below, we include the official economic reports that would be released if the government were open and conducting business as usual. However, with the Labor Department, Census Bureau, and Bureau of Economic Analysis pausing activity due to the shutdown, these reports will likely be delayed. The Federal Reserve is independently funded, though, and the University of Michigan’s survey should also carry on. Monday, Oct. 6. After the bell earnings: Constellation Brands (STZ) Tuesday, Oct. 7 August trade balance at 8:30 a.m. ET Federal Reserve’s outstanding consumer credit report at 3 p.m. ET The Club’s Monthly Meeting for October Before the bell: McCormick & Co (MKC) After the bell: Penguin Solutions (PENG Wednesday, Oct. 8 Fed meeting minutes at 2 p.m. ET After the bell: AZZ (AZZ) Thursday, Oct. 9 Jobless claims at 8:30 a.m. ET Before the bell: PepsiCo (PEP), Delta Air Lines (DAL), Tilray (TLRY), Helen of Troy (HELE) After the bell: Levi Strauss (LEVI), Apogee Enterprises (APOG) Friday, Oct. 10 University of Michigan’s consumer sentiment survey (preliminary) at 10 a.m. ET (Jim Cramer’s Charitable Trust is long NVDA, HON. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
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