The federal government shut down last Tuesday after politicians were unable to agree on a budget by midnight Monday. This left investors sensitive to the melodrama coming out of Washington, sending stocks up and down. For the week, the Dow and the S&P 500 ended lower, but the Nasdaq posted its fifth straight weekly gain. Things could go on a bit longer, as the budget is being tied to raising the debt ceiling. If that doesn’t happen, October 17 is the likely day of a default. Meanwhile, what economic data we got was mixed.
The Chicago PMI and the ISM Index showed manufacturing growing a bit stronger than expected. But ISM Services missed its estimate, though still showed expansion. The government shutdown denied us the September Employment Report, but we did get some jobs data. The ADP employment index had a gain of 166,000 private payrolls, which economists say suggests a slight slowing in job growth. Weekly unemployment claims were up by 1,000, but stayed below recession and pre-recession levels and the four-week average fell to 305,000, its lowest level in more than six years.
The week ended with the Dow down 1.2%, to 15073; the S&P 500 down 0.1%, to 1691; but the Nasdaq was up 0.7%, to 3808.
The government shutdown had mixed impact on bonds, some issues booking modest losses, others posting small gains. The FNMA 3.5% bond we watch ended the week up .01, at $101.25. National average mortgage rates dipped for the third straight week, to their lowest level in more than three months, in Freddie Mac’s Primary Mortgage Market Survey for the week ending October 3. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up to the minute information.