What to watch this week

The major averages finished this past week little changed, as a light economic and earnings calendar saw investors take the week's events in stride, even President Trump's latest tariff surprise late Thursday.

In the week ahead, however, looming developments may prove more troublesome for financial markets.

Tuesday is set to be a pivotal day for investors. It will mark the final day of the third quarter, an eventful period that saw the Dow (^DJI), S&P 500 (^GSPC), and Nasdaq (^IXIC) all reach record highs.

Meanwhile, the US government is on a collision course with its latest shutdown, which is set to take effect at 12:01 a.m. ET on Wednesday, barring congressional action.

A government shutdown potentially imperils the release of upcoming economic data, including Friday's scheduled jobs report, and may muddy the picture ahead of the Federal Reserve's next policy meeting, which is now just four weeks away.

“The only realistic chance of avoiding a shutdown is for the Senate to pass the House-approved [continuing resolution],” Fundstrat's policy strategist Tom Block wrote in a note on Friday. Block noted that since this resolution would be subject to a Senate filibuster, the chamber would need 60 votes to get this bill through, which means flipping seven Democratic senators. A tall order in just a few days.

Read more: How a government shutdown would affect your student loans, Social Security, and more

If released, Friday's aforementioned September jobs report is expected to be the highlight on the calendar, with Wall Street economists forecasting that the US economy created 43,000 new nonfarm payroll jobs during the month. The unemployment rate is expected to remain at 4.3%.

Data on job openings, consumer confidence, and manufacturing activity are also set to feature on the economic calendar.

Earnings will be quite light, with Nike's (NKE) report on Wednesday set to be the week's biggest corporate update. The big banks will get the third quarter earnings season underway in earnest in mid-October.

Investors have generally been served well by not paying close attention to political goings-on. The coming week might be a hard time to resist the temptation.

In addition to the looming government shutdown and the anticipated monthly jobs data, the legal fight over who sits on the Federal Reserve's Board of Governors continues to evolve.

Last week, Fed governor Lisa Cook's legal team urged the Supreme Court to reject the Trump administration's efforts to remove her from her post. Cook also received the support of former Fed chairs, including Ben Bernanke and Janet Yellen, in an amicus brief filed with the Court.

The Trump administration has sought to remove Cook from her post on the Fed board amid allegations of mortgage fraud related to homes purchased in 2021. A temporary court order kept Cook in attendance at this month's Fed policy meeting.

When the Fed voted to cut rates by 0.25% earlier this month, only newly confirmed Fed governor Stephen Miran dissented from the opinion — Miran would've preferred a 0.50% rate cut.

Fed forecasts suggest a majority of the Federal Open Market Committee (FOMC) sees the case for two more rate cuts this year, but six members of the committee actually penciled in no further cuts in 2025. Cook's removal from the Fed board and Trump's appointment of another FOMC member this year would likely add one more voice in favor of deeper rate cuts.

Friday's pending jobs report — which could be left on ice in the event of a government shutdown — may help clear the path to further rate cuts this year.

Read more: How jobs, inflation, and the Fed are all related

But the importance of this jobs report, the last before the Fed's next meeting, is heightened given the central bank has “no risk-free path” ahead, as Fed Chair Jerome Powell described it this past week.

In a note on Friday, the team at Oxford Economics said they expect the US economy added 85,000 nonfarm payroll jobs in September. This figure, the firm wrote, “should reassure the Federal Reserve that the labor market isn't deteriorating, allowing the central bank to keep policy on hold at its October meeting.” If the data is actually released, that is.

Oxford added that a government shutdown typically sees 40% of workers furloughed, with those workers getting back pay once the shutdown ends.

The White House, however, suggested that federal agencies prep mass layoffs — not furloughs — in the event of a shutdown. And the current labor market offers few indications it's in a position to absorb thousands of newly jobless government workers.

“Theoretically, the RIF [reduction in force] could target all furloughed workers, though practically it would likely be much less,” economists at Bank of America wrote. “Still, any employees that lose their job would likely face a hard time finding new work, which would put upward pressure on the unemployment rate.”

The S&P 500 finished Friday's trading session north of 6,600.

One of Wall Street's staunchest bulls sees another 400-point rally in the offing this year.

Brian Belski, chief investment strategist at BMO Capital Markets, raised his price target for the benchmark index to 7,000 on Friday, writing that this target “might end up being too low.”

In his note, Belski reiterated the view he and his team have held for the last 15 years, which is that we are in the middle of a 25-year secular bull market.

“Our process kept us invested in 2025 which resulted in the best quarterly performance during 2Q that we have ever had in over 20 years of overseeing equity portfolios,” Belski wrote. “So yes, let’s chase this bull market.”

Belski added that his team will “gladly accept the unabashedly bullish label undoubtedly coming our way.”

“With the Fed cutting interest rates, earnings solidifying, AI not ANYWHERE near bubble territory and stock market performance broadening out,” the firm added, “the believability and comfortability of US stocks is back in full swing, in our view.”

For many investors, this year's market is still defined by the shock reaction to Trump's “Liberation Day” announcements. But it only took about a month for those losses to be fully erased. Moreover, volatility has steadily come out of the market. The VIX (^VIX) has fallen from north of 50 in early April to the mid-teens as of Friday. Since July 1, the index has only traded above 20 one time.

After recovering “Liberation Day” losses in early May, the S&P 500's path back to record levels has been nothing short of orderly, a behavior that has Belski recalling some of the US stock market's most decorated years.

“In fact, 2025 could very well be the table setter for a 1995-1996 redux of goldilocks,” Belski wrote. “We will default to the naysayers to anoint the three macro bears, which are sure to materialize.”

Economic data: Dallas Fed manufacturing activity, September (-1.8 prior)

Earnings calendar: Carnival Corporation (CCL), Jefferies (JEF), Vail Resorts (MTN), Diginex (DGNX)

Economic data: FHFA house price index, month-on-month, July (-0.2% previously); MNI Chicago PMI, September (41.5 previously); JOLTS job openings, August (7.18 million previously); Conference Board consumer confidence, September (95.8 expected, 97.4 previously); Dallas Fed services activity, September (6.8 previously)

Earnings calendar: Nike (NKE), Paychex (PAYX), Lamb Weston Holdings (LW)

Economic data: MBA mortgage applications, week ended Sept. 26 (0.6% previously); ADP private payrolls, September (+48,000 expected, +54,000 previously); S&P Global US manufacturing PMI, September (52 previously); ISM manufacturing PMI, September (49.2 expected, 48.7 previously); Construction spending, month-on-month, August (+0.1% expected, -0.1% previously); Wards total vehicle sales, September (16.15 million expected, 16.07 million previously)

Earnings calendar: RPM International (RPM), Acuity (AYI), Levi Strauss (LEVI), Conagra Brands (CAG)

Economic data: Challenger job cuts, year-on-year, September (+13.3% previously); Initial jobless claims, week ended Sept. 27 (218,000 previously); Factory orders, August (-0.1% expected, -1.3% previously); Durable goods orders, August final reading (+2.9% previously)

Earnings calendar: No notable earnings.

Economic data: Nonfarm payrolls, September (+43,000 expected, +22,000 previously); Unemployment rate, September (4.3% expected, 4.3% previously); Average hourly earnings, month-on-month, September (+0.3% expected, +0.3% previously); Average hourly earnings, year-on-year, September (+3.7% previously); S&P Global US services PMI, September final reading (53.9 previously); ISM services index, September (52 expected, 52 previously)

Earnings calendar: No notable earnings.

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