Despite the uncertainty unleashed by the government shutdown, U.S. equity markets displayed surprising resilience. On October 1, the Dow rose about 0.09%, the S&P 500 added 0.34%, and the Nasdaq gained 0.42%, pushing indices into fresh record highs even while macro and political risks mounted. The rally was powered largely by strength in healthcare, chip stocks, and defensive sectors.
Healthcare led the charge. The sector’s gains were magnified by a high-profile deal between Pfizer and the White House: Pfizer agreed to lower prescription drug prices in Medicaid in exchange for tariff relief, a move investors saw as a signal of policy negotiation in volatile times. The pharma announcement helped offset negative sentiment from weak private job growth. Indeed, the ADP employment report showed a decline of 32,000 in private payrolls—far below expectations.
Semiconductors also played a starring role. Micron surged nearly 9 %, helping to power broader tech index gains. The Philadelphia chip index added ground, and tech names with exposure to AI and cloud infrastructure outperformed in a market already betting heavily on innovation themes. Utilities, led by AES, also posted strong gains, supported by takeover buzz.
Even in the face of a weakened ADP print and the shutdown, yields fell modestly—10-year Treasuries dipped to around 4.10%—and gold pushed toward record territory, indicating that some investors were hedging into safe havens. The dollar index declined, adding tailwinds to multinational earnings forecasts.
The broader theme: investors appear to be ignoring nearer-term political dysfunction and doubling down on structural bets. Still, many strategists warn that this optimism is fragile. A prolonged shutdown could erode consumer confidence, stall federal contract flows, delay key economic reports (including the all-important labor data), and trigger real economic pain. Until then, the market is teasing that, for now, the outlook remains tilted to “growth over risk.”
