Weekly Investment Update (11/14/2025)

Markets experienced a sharp momentum unwind this week, driven by valuation concerns, increased scrutiny of AI business models, and a more hawkish Fed tone that pushed December rate cut odds below 50%. Broader risk-off sentiment also reflected caution ahead of next week’s key tech earnings and ongoing uncertainty around labor market trends amid a government data vacuum.

Still, the backdrop remains constructive. The shutdown has ended, and while some releases are delayed, earnings have been strong — Q3 S&P 500 EPS growth is tracking at 13.1%, with positive guidance far outweighing negative. Consumer caution is building, but it has yet to significantly disrupt spending. With easing trade tensions, fiscal policy support re-emerging, and seasonal trends turning favorable, we remain optimistic that solid fundamentals and eventual policy easing will help markets regain their footing as we move into the end of the year.

Government Shutdown Ends After Record 43 Days

What is happening: A record-long 43-day U.S. government shutdown ended this week after President Trump signed a funding package that passed the House in a 222–209 vote. The legislation includes full-year funding for select departments, such as Agriculture and Veterans Affairs, while most other agencies are funded only through January 30. This temporary measure leaves open the risk of another shutdown early in the new year.

The core dispute that triggered the shutdown regarding whether to extend pandemic-era ACA subsidies remains unresolved. Congressional Democrats had pushed to maintain the subsidies, while Republicans sought to let them expire. Ultimately, Democrats conceded to reopen the government, settling for a vote on the subsidies, meaning the enhanced ACA subsidies could still expire as scheduled.

Why it matters: Historically, government shutdowns have limited effects on markets or the broader economy. Despite this episode being the longest in history, equity markets rose modestly over the shutdown period, suggesting that investors largely discounted the temporary disruption. The Congressional Budget Office estimated that the 2018–19 shutdown shaved 0.4 percentage points off quarterly GDP growth and temporarily lifted unemployment by 0.2 percentage points, with subsequent quarters recouping most of the loss. We expect the impact on the economy to be similar for this shutdown, and that shutdown-related disruptions are unlikely to alter the medium-term growth outlook.

The more significant near-term consequence lies in the delay of key federal economic data. With statistical agencies closed through most of October, nearly all major releases for September and October were postponed. While September data should be published soon, since it had already been collected and partially processed, October’s data will be more problematic. The Bureau of Labor Statistics (BLS) will need to reconstruct October surveys retroactively, introducing reliability concerns, particularly for household-based measures such as unemployment and labor participation. The October jobs report may be incomplete or delayed, and its quality uncertain. If processing lags persist, even the November employment report could be postponed beyond its scheduled December 5 release, potentially after the December 9-10 FOMC meeting.

For the Federal Reserve, this data fog complicates decision-making at a critical juncture. Chair Powell has emphasized caution amid incomplete data, suggesting the Fed may hesitate to adjust policy at the upcoming meeting. The Fed will likely have September and October payrolls in hand by then, with both expected to show modest weakness in part due to the temporary federal workforce reduction. In our view, a softening labor market warrants an additional move toward a more neutral policy stance, though we acknowledge that the data uncertainty may cause the Fed to move more slowly than it otherwise might have.

Alternative Labor Market Data Indicate Continued Moderation

What is happening: With the recent government shutdown, it remains unclear whether the October nonfarm payrolls reports will be released. That said, various private and alternative data sources remain a valuable way to assess current labor market conditions in the absence of official government data. This week, ADP Research, the organization behind the ADP National Employment Report, released its estimate of the four-week moving average for weekly changes in private-sector employment. In the week ending October 25, the report showed job creation declined by 11,000 jobs per week, suggesting labor demand continues to gradually moderate. Similarly, the October NFIB small business employment report showed hiring plans declined to a net 15%, below September’s level though roughly in line with 2023 and 2024 averages.

While these reports point to easing labor demand, other data suggest that firms have yet to make meaningful reductions in headcount. Although the Department of Labor has not released aggregate weekly data on initial jobless claims due to the government shutdown, state-level data remain available. In the week ending November 8, initial claims were estimated to be 226,000 based on state-level data, low by historical measures and only moderately above the latest official reading. Additionally, mentions of “layoffs” or other references to workforce reductions on third-quarter earnings calls have declined significantly from their 2023 peaks, indicating that companies are not actively preparing to reduce employment.

Why it matters: The data suggest the labor market is gradually cooling, with labor demand continuing to ease but without evidence of a severe slowdown. Though job growth is slowing, firms appear to be trimming headcount selectively rather than engaging in broader layoffs, reflecting a backdrop of slowing economic growth, yet not one that suggests significant economic downturn. Overall, despite the lack of official government data, the labor market appears to still be in a “slow to hire, slow to fire” environment.

Looking ahead, with the federal government’s reopening, markets will likely continue to rely more heavily on alternative data sources in the near term given the distortions around data collection during the shutdown. As official government data are released incrementally, it will be important to recognize that while the data remain credible, quality and consistency may be affected by these delays. However, markets may still experience short-term volatility if incoming data appear weaker than expected. At Bessemer, we take a broad approach to forming our economic and market views, incorporating insights from government, private, and real-time market data to develop a balanced outlook.