2 October 2025,05:54
Daily Market Analysis
2 October 2025, 05:54
Key Takeaways:
*S&P 500 and Nasdaq hit all-time highs despite the first U.S. government shutdown since 2019.
*ADP report showing a 32,000 payroll decline boosted expectations for Fed easing in October, with futures pricing in a 99% chance.
*Investors focus on accommodative Fed and BoJ stances, with equities rallying even as political gridlock suspends key economic releases.
Market Summary:
U.S. equity indices overcame early weakness to close at fresh all-time highs, shrugging off the first federal government shutdown since 2019 as soft labor market data bolstered expectations for Federal Reserve rate cuts. The Nasdaq Composite and S&P 500 both reached record levels despite the political impasse that has shuttered numerous government departments.
The rally was catalyzed by the ADP National Employment Report, which showed private payrolls declined by 32,000 in September—a significant deterioration from the previous month’s 52,000 gain. The unexpected contraction fueled market speculation that the Fed will proceed with another rate cut at its October meeting, with interest rate futures now pricing in a 99% probability of easing.
The accommodative policy outlook was further supported by expectations that the Bank of Japan will maintain its ultra-dovish stance amid U.S. political uncertainty and renewed trade tensions from the White House. The yen’s continued weakness, resulting from Japan’s persistent monetary stimulus, has provided additional liquidity to global financial markets, supporting risk asset appreciation.
With key government economic releases suspended during the shutdown, market participants will focus on political developments and commentary from former President Trump regarding resolution timelines. The ability of equities to advance despite the governance disruption suggests investors are prioritizing monetary policy expectations over political dysfunction, at least in the near term.
Technical Analysis
The S&P 500 has resolved its recent consolidation pattern with a decisive breakout, advancing more than 0.8% to establish a fresh bullish technical bias. The move is characterized by a higher-high pattern formation following a prior technical retracement, confirming a resumption of the index’s primary uptrend and suggesting potential for further extension into uncharted territory.
The breakout reflects underlying strength in market structure, with buyers demonstrating sufficient conviction to overcome previous resistance levels. This development is particularly significant as it occurs amid ongoing political uncertainty, indicating that market participants are prioritizing monetary policy expectations and corporate fundamentals over near-term governmental dysfunction.
Momentum indicators are aligned with the constructive price action. The Relative Strength Index has advanced into overbought territory, reflecting strong buying pressure, while the Moving Average Convergence Divergence is showing early signs of rebounding above its zero line. This configuration suggests that a fresh wave of bullish momentum is emerging, potentially supporting additional gains in the sessions ahead.
Resistance Levels: 6737.60, 6780.45
Support Levels: 6701.00, 6670.00
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