Zacks Investment Management

In this week’s Steady Investor, we look at the market forces shaping today’s headlines and the key indicators that could guide your next financial decision, including:

• Mixed labor market signals
• Shutdown fears, muted economic effects
• Tariffs are slowing global exporters

After a Long Pause, Investors Finally Get Data on the U.S. Labor Market – After long delays due to the U.S. government shutdown, market participants finally got some vital data on the health of the U.S. economy. The verdict is mixed. According to the Labor Department, employers added 119,000 jobs in September, the strongest monthly gain in five months and well above expectations. On a sector basis, payrolls most notably rose in healthcare, education, leisure and hospitality, retail, construction, and state/local government. While the headline number was solid, the ‘mixed’ piece comes into focus in other areas of the report. The unemployment rate rose to 4.4%, a four-year high, as nearly 500,000 people entered the labor force. Revisions to the July and August jobs report showed that payrolls were a net 33,000 lower than first reported, underscoring a summer slowdown. Continuing jobless claims climbed to 1.97 million, the highest since late 2021, hinting at tougher re-employment for those already out of work. And finally, and perhaps most importantly, transportation/warehousing and temporary help jobs fell in September, which are areas that often soften early in slowdowns.¹

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BLS³

For investors, it all goes back to what this means for the Fed meeting in December. ‘Mixed’ is also the prevailing takeaway here, as September’s job report likely argues for the doves (likely rate cutters) and the hawks (those who want to hold rates steady. Hawks can point to better-than-expected hiring and resilient demand, while doves can cite the higher jobless rate, slower three-month hiring trend (averaging 47,000 through September), and a pattern of downward revisions as reasons to insure against further cooling. Rate-cut odds for December nudged to ~40% after the release.

Assessing the Damage from the U.S. Government Shutdown – The U.S. government shutdown lasted a record 43 days. Markets didn’t seem to mind all that much. The S&P 500 rose about 2.5% during the lapse, and 10-year Treasury yields barely budged. As we’ve written before, U.S. government shutdowns are big on the fear headlines but light on the economic damage. No government shutdown to date has caused a recession or bear market, and this one was no exception. To be fair, however, the episode was not painless—going six weeks without pay is a real strain for affected workers and nearby small businesses. But for markets, day-to-day commerce elsewhere kept moving along, and corporate earnings broadly did not feel any headwinds. Government data is the main lingering issue. With October collection disrupted, some reports will be skipped or reconstructed. The BLS is likely to forego October’s inflation report (CPI/PPI) and portions of the jobs report, with September’s delayed Employment Situation arriving on November 20. GDP, trade, retail sales, durable goods, and industrial production should resume on a lag as agencies catch up, but we do not think this retroactive data will have much effect on markets. The funding bill is short-term, which means we could be writing about the shutdown again come January 2026. For their part, markets are likely to keep reacting the same way—watching profits, rates, and demand, not Washington’s stop-start routine.⁴

Global Growth Starting to Feel the Effects of Tariffs – A survey of global economic growth data reveals a trend: major exporting countries facing tariffs are seeing a slowdown. Japan and Switzerland both reported Q3 contractions, citing weaker U.S.-bound orders as higher duties raised costs. Mexico and Ireland, which are major U.S. suppliers, also slipped. Germany and Italy stabilized, but a look back at the last quarter shows declines. Two forces are cushioning the blow. First is the AI build-out. U.S. and global firms are importing chips, servers and networking gear at a rapid clip, supporting manufacturing hubs tied to that supply chain. Second, most targeted countries have avoided broad retaliation, keeping alternative trade channels open. World Bank data indicates that countries are increasingly adapting to tariffs by re-routing goods. While developing-country exports to the U.S. have declined significantly year-to-date compared to 2024, sales to other advanced economies rose, and shipments to other developing markets climbed even more. That’s a key takeaway for investors that many are missing. Trade cooperation is deepening outside the U.S. orbit, which may add a neutralizing tailwind to global growth over time. Recent signs of warmer India–China commercial relations point to more cross-border deal flow, and China’s growing commerce with Southeast Asia is accelerating.⁵

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• How have your investment strategies performed vs. their benchmark?
• Are there fees or penalties if I decide to leave your firm?
• How do you measure risk?
• How are you compensated?
• And 6 more pointed questions

If you have $500,000 or more, we recommend clicking the link below to download your free guide today!

Disclosure