Dow Breaks Record High as Shutdown Deal Nears: What Investors Should Watch Next

Wall Street rallied on Wednesday as traders bet the US government is just hours away from ending its historic shutdown — a move that would finally unlock critical economic data and help clarify the Federal Reserve’s next steps. The Dow Jones Industrial Average surged for a fourth straight session, closing at an all-time high even as big tech lagged.

Roughly 300 stocks in the S&P 500 advanced, though weakness in megacaps left the index little changed around 6,850. Bitcoin erased earlier gains. US Treasury yields fell, with the 10-year slipping to 4.07%, as markets priced in a higher probability of a December Fed rate cut.

Shutdown Deal to Restore Data Flow — but the Market Is Flying Blind

House Speaker Mike Johnson said he expects swift passage of a bipartisan Senate deal endorsed by President Donald Trump. But Democratic leaders are urging members to oppose it, adding last-minute uncertainty.

The bigger issue for markets is the blackout in official economic data — including the October CPI and jobs report. Without these indicators, investors and policymakers have been navigating blind.

“As data releases resume, the case for a December rate cut should re-emerge,” said Seema Shah of Principal Asset Management. “That backdrop favors US equities, particularly big tech and cyclicals.”

Risk-On Sentiment Persists Despite Data Vacuum

Markets have remained surprisingly resilient. Since the shutdown began on Oct 1, the S&P 500 has gained about 2%. Historically, equities tend to rally once shutdown uncertainty is removed: across the past 20 shutdowns since 1976, the index has averaged gains of 1.2% after one month and 2.9% after three months.

“Markets are hoping for the resumption of official data to solidify the Fed outlook,” said Ulrike Hoffmann-Burchardi of UBS Global Wealth Management, who expects two more rate cuts by early 2026.

Oil slipped the most since June on supply concerns, while the dollar steadied.

The Real Test Comes Next Week

Analysts warn the biggest market moves may come after the data floods back in.

“If the long-awaited numbers don’t justify Wall Street’s recent trajectory, sharp moves could occur in either direction,” said Jose Torres at Interactive Brokers.

Fundstrat’s Hardika Singh noted the risk of “information whiplash” as investors digest backed-up releases — two jobs reports, GDP, PPI, and retail sales — all at once.

The shutdown may have widened the K-shaped divide between high- and low-income consumers, she added, complicating the macro picture.

Economists Expect Only Temporary Damage

Vanguard’s Josh Hirt said the shutdown’s economic drag should be mostly reversed once operations resume, with a Q1 2026 rebound likely. TD Securities expects a full set of September data before the Fed’s December meeting.

“In the absence of official data, our analysis suggests the economy has picked up momentum,” Hirt said.

Strategists See Further Upside for US Stocks

A revival in AI infrastructure spending is adding fuel to optimism. Macquarie’s Thierry Wizman said strong tech-sector investment is helping reinforce expectations of sustained US growth.

Yardeni Research sees the S&P 500 hitting 7,000 before year-end. UBS Global Wealth Management projects 7,300 by mid-2026.

“We believe US stocks have further to run,” said UBS’s Mark Haefele. “Under-allocated investors should add exposure to AI, power and resources, and longevity themes.”