US stocks recovered on hopes of an early end of Govt shutdown

 

·         But Trump is not in a position to end the shutdown w/o compromising with Democrats, as 5+ moderate Republican Senators are opposing the 'nuclear option'

·         Latest ADP Private Payroll and Chicago Fed job data indicate the US unemployment rate remains around 4.3-4.4% for October'25, almost the same as for the last few months

·         The US/UM consumer sentiment plummeted over the high cost of living, the weak labor market, and the lingering government shutdown

·         The market is concerned about growing US political & policy uncertainty; Trump is set to lose the House & Trifecta in November’26 midterm election

On Wednesday, October 5, 2025, apart from ongoing (24/7) Trump reality shows, the focus of the market was also on ADP private payroll job data in the absence of official (government) BLS data on the employment situation of the country amid a 38-day-long US shutdown. On Wednesday, the ADP flash data shows Private nonfarm payrolls in the U.S. (only private establishment/business employees) added +42K payroll jobs in October from -29K sequentially (m/m) and +221K yearly (y/y), and higher than the market expectations of +25K after two consecutive months of contractions.

In October, the US Private Sector added +33K service-producing jobs, led by trade/transportation/utilities (+47K), education/health services (+26K), and financial activities (+11K). In contrast, employers shed jobs in professional business services (-15K), information (-17K), and leisure and hospitality (-6K) for the third straight month. The goods-producing sector added +9K jobs, namely natural resources/mining (+7K) and construction (+5K), while manufacturing lost -3K jobs.

Meanwhile, annual pay growth was flat in October from the month prior, at 4.5% for job-stayers and 6.7% for job-changers; the annual median pay level for job stayers $61K; ADP noted: "Pay growth has been largely flat for more than a year, indicating that shifts in supply and demand are balanced".

Job Growth by Company Size:

·         Large companies (500+ employees): +76K jobs.

·         Medium companies (50-499 employees): +0 jobs.

·         Small companies (<50 employees): -34K jobs.

Overall, the 3MRA of ADP Private Payroll job addition was around +3K in October against +24K sequentially and +221K yearly. The YTM average of ADP Private Payroll job additions was around +60K in October against +144K in 2024.

The BLS NFP Private Payroll job addition data available up to August'25 shows +74K average job addition in 2025 (YTM). Thus, even after expecting negative revision, the BLS and ADP Private Payroll job addition data for 2025 should converge or be largely in line.

 

The ADP said:

v  Last month delivered a rebound from two months of weak hiring, but the bounce wasn't broad-based. Education and health care, trade, transportation, and utilities led the growth.

v  For the third straight month, employers shed jobs in professional business services, information, and leisure and hospitality.

v  Private employers added jobs in October for the first time since July, but hiring was modest relative to what we reported earlier this year.

v  Meanwhile, pay growth has been largely flat for more than a year, indicating that shifts in supply and demand are balanced.

BLS vs ADP private payroll survey

The average divergence between NFP and ADP private payroll monthly job addition numbers is now decreasing amid the increasing adoption of real-time ADP payroll processing software in private establishments. But, overall, a nominal number of US NFP Private Payroll employees is still higher by around 1350K in the BLS survey than ADP at present, on average, against 1600K in pre-COVID times.

In both the BLS establishment survey and the ADP private payroll survey, individuals who hold multiple payroll jobs are usually counted multiple times based on surveys/payroll processing software. The BLS survey collects data from business establishments and counts the number of employees on their payroll, regardless of whether they have one or multiple jobs. If someone holds multiple jobs and one of those jobs uses ADP for payroll processing, only the primary job with ADP would be counted in the survey; if the multiple jobs are in another company that does not use ADP payroll software/system, they will not be counted twice. This also partly explains the frequent divergence between ADP and BLS/EST surveys. Additionally, the BLS EST survey samples a much larger number of establishments, around one-third of all nonfarm payroll jobs, compared to the limited ADP survey, which is based on data from ADP's client companies, using ADP payroll processing software/system.

The ADP Report is based on the actual anonymized and aggregated payroll data of more than 25 million U.S. employees. The BLS survey samples a much larger number of establishments, around one-third of all nonfarm payroll jobs, compared to the ADP survey, which is based on data from ADP's client companies, using ADP payroll processing software/system only. The BLS surveys about 141K businesses and government agencies, representing approximately 486K individual work sites, to provide detailed industry data on employment, hours, and earnings of workers on nonfarm payrolls under the Current Employment Statistics (CES) program.

The larger sample size of the BLS survey allows it to provide a more comprehensive and accurate representation of the overall employment situation in the US. Furthermore, the BLS survey uses more rigorous statistical methods and adjustments to account for seasonal variations, business births/deaths, and other factors that can impact population/labor force and employment data. This helps the BLS survey provide a more reliable and consistent measure of nonfarm (NFP) payroll employment than ADP, but ADP is also providing almost real-time data.

The BLS survey is based on a sample of business establishments, while the ADP survey is based on payroll data from businesses that use ADP for payroll processing. Differences in sampling methods, sample sizes, survey periods, and data collection techniques can lead to variations in the reported figures. The BLS establishment survey and the ADP private payroll survey are conducted at different times of the month, which can also contribute to variations in the reported figures.

In any way, the BLS/US government should ensure proper employment surveys using real-time payroll processing software or some other credible digital method in this digital age (rather than using the old-fashioned, unreliable/unverified telephonic/postal survey) for the largest economy and, most importantly, the central bank (Fed) in the world.

In any case, in the absence of BLS data and the headline unemployment rate, we could focus on the Chicago Fed Real Time unemployment rate, which indicates 4.4% for October'25. This is a forecast that derives data from ADP, State Unemployment benefits, and various other private sources.

Overall, the 3MRA of the US unemployment rate and core inflation would be around 4.3-4.5% and 2.9-3.1% by December'25, in line with the Fed's September forecast. The Fed needs to bring down the unemployment rate to at least 3.8-3.5% (by 80 bps) and core inflation (PCE+CPI average) to 2.0-1.9% (by ~100 bps). As there is upside risk in both unemployment and core inflation, the Fed will be in neutral mode; i.e., continue to keep real rate of interest ~1.00% (REPO rate -3MRA of core inflation). At present, the Fed REPO rate is at 4.00% vs average core inflation of ~3.00%; i.e., the Fed is at almost neutral or slightly restrictive as per divided FOMC participants. Fed now also views 4.0% as the minimum unemployment rate or maximum employment (96% of the labor force). Thus, the Fed may keep the rate at neutral till at least H1CY26 to bring down both core inflation and the unemployment rate back towards target in a calibrated manner.

The UM consumer sentiment plunges in November.

On Friday, October 7, 2025, the University of Michigan’s (UM) flash data shows the consumer sentiment index fell to 50.3 in November, plunged from 53.6 sequentially (m/m) and 70.5 yearly (y/y), and below expectations of 53.2. The latest reading marked the second-lowest on record, just above the June 2022 low, as Americans grew increasingly concerned about the higher cost of living and the potential economic fallout from the longest US government shutdown in history. The Current Economic Conditions Index fell to an all-time low of 52.3, driven by a 17% drop in assessments of current personal finances, while the Consumer Expectations Index slipped to a six-month low of 49.0, reflecting an 11% decline in year-ahead business expectations. Sentiment weakened broadly across age, income, and political groups, with one exception: households in the top third of stock ownership reported an 11% rise in confidence, supported by stock market strength.

The UM/US Inflation expectations were mixed: year-ahead inflation inched up to 4.7% from 4.6%, while long-term expectations eased to 3.6% from 3.9%.

Overall, the latest UM survey indicates a K-shaped economy, where the top 10%, having immense stock market wealth, are feeling confident, while the remaining 90%, lower or even higher middle-income groups, are much less confident amid rising cost of living, unemployment, and political & policy paralysis.

Market wrap

Wall Street futures tumbled early Friday, November 7, 2025, on concern about AI bubble valuation and sliding US consumer sentiment, negative for discretionary consumer spending, and a soft landing. But US equities staged a late-day recovery, flipping early session losses into modest gains on optimism around bipartisan talks to resolve the ongoing US government shutdown. Senate Republicans rebuffed Democrats' scaled-back funding proposal, but backchannel negotiations fueled a pre-close risk-on pivot. Markets priced in a potential weekend breakthrough, easing fears of prolonged disruptions. The rebound came despite heightened economic uncertainty, with key indices reflecting a mixed close. This session capped a volatile week marked by delayed federal data releases and escalating shutdown impacts, now in its third week. Ongoing rotation out of "Magnificent Seven" stocks continued, with stretched multiples (e.g., Tesla's forward P/E at 85x) drawing scrutiny. Broader market breadth improved, with 65% of S&P 500 stocks advancing.

Sector and Stock Highlights

Winners:

·         Consumer Defensive: Up ~1.2%, led by Coca-Cola (KO) +2.3% on resilient demand signals amid economic jitters.

·         Energy: Gained ~0.9%, with Exxon Mobil (XOM) surging 2.5% on crude price stabilization and M&A buzz.

·         Other notables: T-Mobile (TMUS) +2.1% (strong subscriber growth reports); Procter & Gamble (PG) +1.8%.

Losers:

·         Technology: Down ~0.4%, pressured by AI valuation concerns. Tesla (TSLA) plunged 4.0% after an analyst downgraded on EV demand slowdowns; Meta Platforms (META) -2.1%; Oracle (ORCL) -2.0%.

·         Broader tech: Nvidia (NVDA) -1.5%; Microsoft (MSFT) flat.

This close leaves the S&P 500 up 0.2% week-to-date, but down 1.1% month-to-date amid shutdown volatility. VIX (fear gauge) eased to 18.2 from Thursday's 19.5 peak. Bond yields ticked higher (10-year Treasury at 4.32%), while the dollar softened 0.2% against a basket. Looking ahead, markets eye potential BLS payroll revisions (delayed from October) and weekend fiscal talks—failure could trigger fresh selling early next week.

Latest Update on US Government Shutdown: November 8, 2025

The partial US government shutdown, now in its 39^th day, remains unresolved as of Saturday morning, making it the longest in US history (surpassing the 2018-2019 record of 35 days). It began on October 1, 2025, after Congress failed to pass funding legislation ahead of the fiscal year start, primarily due to partisan disputes over Affordable Care Act (ACA) subsidies and broader spending priorities. Republicans, controlling both chambers and the White House under President Trump, have pushed for a "clean" continuing resolution (CR) to extend funding temporarily, while Democrats demand attachments like a one-year extension of ACA tax credits to lower health premiums. Bipartisan talks continue amid mounting public pressure, but no breakthrough has emerged. Senate Majority Leader John Thune (R-SD) expressed guarded optimism for a weekend resolution, though weekend votes remain unclear.

Key Developments from Friday (November 7)

Senate Vote Fails: Republicans rejected Senate Minority Leader Chuck Schumer's (D-NY) compromise proposal to end the shutdown in exchange for a one-year extension of ACA subsidies. The measure needed 60 votes to advance but fell short, with only three Democrats supporting prior GOP-led CR attempts. Sen. Lindsey Graham (R-SC) decried the offer as insufficient, while progressives urged Democrats to hold firm post-midterm election gains.

SNAP Benefits Secured: The Supreme Court issued an emergency order blocking a lower court's mandate for full November SNAP (food stamp) payments, allowing the Trump administration to withhold full funding amid the shutdown. However, the USDA complied partially by tapping contingency funds, issuing full benefits to 42 million recipients after a Rhode Island judge's deadline. Nine states (e.g., NY, NJ, and PA) began processing payments on Friday evening. Without this, partial (50-65%) allotments were planned, risking food insecurity for low-income families. Annual SNAP spending exceeds $100 billion.

Flight Disruptions Escalate: The FAA enforced a 10% flight reduction at 40 major airports (e.g., ATL, ORD, LAX) due to air traffic controller shortages from furloughs. Over 1,000 flights were canceled on Friday, with up to 5,000 daily delays possible. Transportation Secretary Sean Duffy warned of potential airspace closures if unresolved. Travelers face chaos, with 800+ US-linked cancellations reported earlier in the week.

Ongoing Impacts

Federal Workers and Military: Over 700,000 non-essential employees remain furloughed, with pay extensions through late November. Active-duty troops and essential workers continue to go unpaid. Some agencies (e.g., GSA) guarantee retroactive pay, but others are inconsistent. Military families report 30-300% spikes in food pantry use.

Social Programs at Risk: WIC (nutrition for 7 million women/children) relies on depleting state emergency funds; Head Start (early education for 750,000 kids) faces lapses in states like FL, GA, MO, OH. Heat assistance funding expired, exacerbating winter vulnerabilities.

Economic Toll: Consumer sentiment hit near-record lows (U. Michigan index: 52.1). Food banks see extended queues, with hundreds of cars lining up in California for donations. Markets rebounded on Friday on slim hopes of progress, but a prolonged shutdown could trigger turbulence next week.

Public Sentiment: Real-time social media posts highlight frustration—e.g., GOP blaming Democrats for "radical" demands, while others criticize Republicans for heartlessness. Aviation chaos dominates, with users sharing delay horror stories. Both Democrats and Republicans are now under huge public pressure for an extended political soap opera. Pressure builds from governors and locals urging an end, with bipartisan negotiations ongoing in DC. House Speaker Mike Johnson (R-LA) suggested a quick recall if a deal materializes. Failure could compound harms, including IRS delays and delayed economic data.

Trump's Latest Comments on the Government Shutdown (as of November 8, 2025)

President Trump has remained vocal on the ongoing government shutdown—now the longest in U.S. history at 39 days—primarily via interviews, social media, and public statements. His rhetoric continues to emphasize blaming Democrats for the impasse, tying it to recent electoral setbacks, and pushing for structural changes like ending the Senate filibuster to force a resolution. Trump has shown little interest in direct negotiations, instead framing the shutdown as leverage to pressure Democrats on issues like ACA subsidies and spending.

November 2-3, 2025 (Fox News Sunday & Mar-a-Lago Event): Ahead of a lavish Gatsby-themed event at Mar-a-Lago, Trump told Fox that he's "desperate for the government to open" and a "big-hearted president" wanting "everybody to get their services." However, he rejected Democratic ties to ACA extensions, calling them "poison pills" that would "destroy our economy." He hosted international figures (e.g., Javier Milei, María Corina Machado) amid the chaos, using the shutdown as a talking point to tout "America First" fiscal discipline.

November 4, 2025 (Truth Social & Press Briefing): Trump escalated threats on social media, posting: "SNAP benefits will be given only when the Radical Left Democrats open up government, which they can easily do, and not before!" This came hours before a White House walk-back confirming partial compliance with a Rhode Island judge's order for November payments. During a briefing, he accused Democrats of "weaponizing hunger" in reverse, claiming his administration was "fully complying" while pushing for a short-term CR. He also lamented the shutdown's record length but refused negotiation overtures, saying, "I've tried everything—now it's their move."

November 5, 2025 (Senate Republican Breakfast & Fox News): Speaking to Senate GOP at a private breakfast, Trump called the shutdown "not good for anybody" but squarely blamed Democrats for "radical demands" blocking a simple funding bill. He renewed his push to eliminate the filibuster, stating: "Unless we end this 60-vote nonsense, Democrats will win big in 2026 and 2028—it's the only way to force through a clean bill and get Americans back to work." In the Fox interview, he tied the shutdown to post-election "woke" backlash, suggesting it fueled Democratic gains but vowing Republicans would "unite and win" by holding firm.

November 6, 2025 (Truth Social Post & VP Vance Briefing Follow-Up): Responding to Vice President JD Vance's criticism of a federal court order mandating SNAP funding, Trump posted: "Our country has to remain very liquid because of wars and catastrophes that could arise—Democrats want to bankrupt us with endless spending while shutting down essential services. End the filibuster NOW so we can reopen government and deliver REAL relief!" He followed up in a rambling White House remark, alleging (without evidence) that Biden-era policies inflated food stamp rolls and boasting about lower Thanksgiving meal costs under his watch, despite overall food prices remaining elevated. Trump also hinted at potential airspace closures if Democrats don't concede, aligning with Transportation Secretary Sean Duffy's warnings.

November 7, 2025 (Fox News Interview, Aired Friday): In a wide-ranging discussion on the shutdown's impacts, Trump doubled down on attributing Republican losses in Tuesday's gubernatorial races (e.g., New Jersey and Virginia) to the stalemate, calling it a "big negative factor" for the GOP. He urged Senate Republicans to "get tough" and pass a clean continuing resolution (CR) without Democratic "add-ons," warning that prolonged delays would hurt the party's 2026 midterm chances. On SNAP benefits, he defended the administration's compliance with court orders for partial payments but reiterated that full funding "should only come when Democrats open the government—they're playing politics with American families."

Trump posted on his Truth:

It’s time for Republican Senators to stop playing games with the Radical Left Democrats and TERMINATE THE FILIBUSTER, IMMEDIATELY OPEN OUR COUNTRY, AND PASS GREAT COMMON SENSE LEGISLATION!

But Senate Political Math does not favor Trump to end the FILLBUSTER.

Overall, Trump needs at least 51 Republican votes (majority) in the Senate (out of 53) to end the FILLBUSTER (Nuclear Option) against 49 Democrats (opposition) Senators and subsequent opening of the Government within 1-2 days. The Senate has 53 Republicans, 45 Democrats, and 2 Independents (who caucus with Democrats), giving Republicans a slim majority. Trump has a simple majority in the Senate, not 2/3^rd (67) or even a minimum of 60 to change any constitutional rule or current filibuster rule of the Senate.  Theoretically, Trump needs at least 51 Republican Votes (simple majority) to change the filibuster rule and reopen the Government, but practically, he has only 47 Republican votes for it, as a minimum of 4-6 Republican Senators are dead against such a change in the filibuster rule, which may create autocracy even in an electoral democracy.

While Trump has unified some hardliners, at least 4-6 moderate Republicans oppose it, making passage impossible without defections from Democrats. Trump rallied them at a White House breakfast on November 5, post-election losses. Allies like Sens. Josh Hawley (MO), Ted Cruz (TX), and Tom Cotton (AR) back it, saying it would "end the games" and pass priorities like voter ID laws. Trump reiterated this in his November 8 X post and a November 7 presser with Hungary's PM.

But still, there are Opponents (Key Moderates): At least five defections

·         Senate Majority Leader John Thune (SD) calls it a "non-starter" and "unchanged" position—it's a "bulwark against bad things."

·         Sen. Thom Tillis (NC): "I'd never vote to nuke it" (retiring, clashed with Trump before).

·         Sen. Susan Collins (ME): Worries about future Democratic majorities passing "sweeping" laws like Medicare for All.

·         Sen. John Curtis (UT): "It forces common ground—principles shouldn't change."

·         Sen. James Lankford (OK): "We need both sides to talk."

·         Potential: Sens. Lisa Murkowski (AK) and Mitt Romney (UT, if still serving) have historically resisted.

Even one "no" vote kills it (needs 51 yes)- GOP unity is fracturing: GOP Moderates fear backlash in 2026 midterms (swing states like ME, NC) and long-term risks if Democrats regain control (e.g., Green New Deal with 51 votes). Thune's leadership (elected November 13, 2024) prioritizes negotiation over nuking rules.

Trump couldn't get the votes earlier—GOP resistance was even stronger before the shutdown became a political disaster. Trump only ramped up pressure after 30+ days of fallout. The shutdown hit record length (39 days), triggering chaos: SNAP delays, 1,000+ flight cancellations, record-low consumer sentiment (U. Michigan: 52.1). Then, GOP election losses on November 5 (e.g., NJ/VA governors) made it a "big negative" for 2026. Trump blamed the shutdown, urging the nuke at a November 5 breakfast and November 7 presser: "Do it now before Democrats do."

Even with all 53 yes votes, the shutdown ends fast—but it's a pipe dream due to holdouts. Trump waited because an earlier push would've failed harder, and the crisis hadn't peaked to force GOP buy-in. If no deal by Monday, expect more fireworks—perhaps Thune floats a compromise CR with minor ACA tweaks. Trump is now also distancing himself from the recent electoral debacle, pointing out that it was expected, not his election, and he didn't take part in active election campaigning. Overall, Trump is going to lose the House in November'26 mid-term election and also his slim Trifecta in the process, causing more political & policy gridlocks or even paralysis.

Bottom Line

Fed may be on hold not only in December '25 but also for H1CY26 to assess US economic data and outlook thereof, along with growing political & policy uncertainty in the world's largest economy.

Technical outlook: DJ-30, NQ-100, SPX-500 and Gold

Looking ahead, whatever may be the narrative, technically Dow Future (CMP: 47140) now has to sustain over 47400-47700 for a further rally to 48000-48300* and 48600/49000-49700/50000 in the coming days; otherwise sustaining below 47200-47000, DJ-30 may fall to 46500/46200-46000/45800* and further 45500/44950-44500/44200 and 43500 in the coming days.

Similarly, NQ-100 Future (25150) now has to sustain over 25400-25700 for a further rally to 26000/26200-26500 in the coming days; otherwise, sustaining below 25300-25000, NQ-100 may fall to 24700/24500-24300/24200* and 23700/23400/23000 and 22600/22400 in the coming days.

Looking at the chart, technically SPX-500 (CMP: 6750) now has to sustain over 6800-6850 for a further rally to 6950/7050 and 7200/7300-7500/8300 in the coming days; otherwise, sustaining below 6700, may fall to 6650/6595 and 6490/6450-6375/6300-6250/6200 and further fall to 6080 in the coming days.

Looking at the chart, Technically Gold (CMP: $4000) has to sustain over 4035-4055 for 4085/4125-4300/4380 and further to 4395-4405 for 4425/4455-4475/4500 to 4555-4575 and even 5000 zone in the coming days; otherwise sustaining below 4025, Gold may again fall to 3910/3875-3770/3740 and 3700/3600-3500/3450 and 3350 levels in the coming weeks.