By Rick Schwerd | October 17, 2025
Our investment team remains committed to sharing updates and market insights to keep you informed. Please look for our next update on November 7.
Government Shutdown Continues
The U.S. government shutdown is now in its third week and shows little sign of resolution after Congress failed to pass stopgap funding. Around 750,000 federal workers are furloughed while others work without pay, and the administration’s planned mass layoffs have been temporarily blocked by a federal judge pending legal review.
The White House has vowed to “ride out” the standoff, maintaining essential services and troop pay even as most agencies remain shuttered. Treasury officials estimate the shutdown is costing the economy up to $15 billion per week, raising concerns that prolonged disruption will weigh on growth and public services unless lawmakers break their impasse over budget priorities and healthcare funding.
The lack of government economic releases due to the shutdown adds a great deal of uncertainty. The September labor market report should have been released on October 3, and the Consumer Price Index and Producer Price Index inflation data normally would have come out this week. The Federal Reserve meets next week and is expected to cut rates by an additional quarter point, even though the key economic data points have not been released.
Good Start to Earnings Season
The third-quarter earnings season is off to a strong start, with many large U.S. banks and tech/AI-sensitive firms beating expectations and driving broader market optimism. Wall Street deal activity has also surged, bolstering investment banking revenue and helping offset macro uncertainty.
According to the top-rated independent economic research firm Evercore ISI, 41 of the S&P 500 companies have reported third-quarter results. Reported sales growth has been 7.7 percent higher and earnings 15.5 percent higher – surprising by 1.6 percent and 5.9 percent, respectively. Overall sales growth is on pace to increase 6.2 percent and earnings to increase 8.1 percent. Extrapolating, Evercore-ISI expects positive 5.3 percent surprises to the balance of companies reporting, suggesting that earnings will increase 13.0 percent for the quarter.
The strong earnings reports have gone a long way in soothing markets following a sharp sell-off last Friday. Markets had been complacent with a lack of volatility. However, some back-and-forth posturing by China and the Trump administration triggered the worst drop in equity prices since April. The S&P 500 lost 2.7 percent while the NASDAQ dropped 3.6 percent. Markets have since recovered most of the losses, with the S&P 500 approximately 1 percent off its all-time high.
Market Volatility and Outlook
There continues to be a great deal of noise in financial markets, given government shutdowns, trade and tariff disputes, and softening in the labor market, to name just a few of the concerns. However, it is hard to get negative on equities when corporate sales and earnings are so strong. Momentum does not insulate us from volatility, as we have seen over the last week, but the secular movement behind stocks remains positive going into the end of the year.
As always, if you have any questions or concerns regarding markets or your financial planning needs, please reach out to us at (518) 415-4401.
About the Author: With almost three decades of financial industry experience, Rick serves as a Senior Investment Officer at Arrow Bank, formerly named Glens Falls National Bank and Saratoga National Bank. He oversees individual and corporate retirement plans, personal trusts, investment management accounts, foundations and not-for-profit relationships.