It was a mixed five days for Wall Street. A boost to sentiment from the end of the longest government shutdown and positive trade developments was offset by continued weakness in the AI trade and hawkish comments from Federal Reserve speakers.
This week, Cleveland Fed President Beth Hammack and Boston Fed President Susan Collins cautioned against further interest rate cuts amid the lack of economic data. On that front, however, the government shutdown ended on Wednesday with the passing of a spending bill, which means that economic data will return, with the Bureau of Labor Statistics confirming release this Thursday for the September jobs report. There will be no October Jobs report due to the shutdown.
In the meantime, the TACO (Trump Always Chickens Out) trade continued with Trump on Friday signing an order exempting certain food products from his reciprocal tariffs – such as coffee, cocoa, and beef – amid growing consumer angst over high grocery prices. He also slashed tariffs on Switzerland from 39% to 15% after they gave him a gold bar with his name on it and a Rolex desk clock on their visit to the White House this week.
For the week, the S&P 500 gained 0.1%, while the Dow (DJI) added 0.3%. The Nasdaq Composite slipped 0.5%.
Future Wealth’s View
The conventional wisdom going into November was that the Federal Reserve had turned the corner and more rate cuts were coming in December. A wavering labor market and economic uncertainty were seen as prime motivators for another reduction in December. But, inflation has been rising – sitting now at 3%. The rising price environment almost surely was the force behind Trump cutting tariffs on coffee and beef this week. There may be more to come to bring down food prices.
The Fed is at a crossroad – while one group of Fed officials agree the labor market has cooled, the other group is unsure whether the slowdown will intensify. And while one group is sanguine about price pressures, others are warning further cuts put years of progress on inflation at risk. In our report on Oct 25, 2025, we had stated that “We expect inflation to climb above 3% and unemployment to rise from current levels”. The Jobs report this Thursday will provide the answer.
After the carnage on Wall Street earlier this week, Friday saw the “Buy the Dip” investors come in a swoop up shares to drive the market back up, limiting the losses for the week. This is a pattern that occurs often in Wall Street. The risk is that at some point the “buy the dip” buyers don’t come back.