The Market Update with EP Wealth Advisors Managing Director, Investments -
Adam Phillips, CFA^®, CAIA, CFP^®

Often quoted in major national media, Adam is a Chartered Financial Analyst (CFA^®), a CERTIFIED FINANCIAL PLANNER™ (CFP^®), and has been included on the Forbes NextGen Best-in-State Wealth Advisors 2019 list. He is a member of the CFA Society of Los Angeles and the CFA Institute. Adam helps establish asset allocation strategy as a member of the EP Wealth Investment Committee, which supports all EP Wealth Advisors and their clients. The Committee’s top-down approach to portfolio construction begins with an outlook on the economy’s likely direction, followed by the implications for different economic sectors and asset classes. This culminates in strategic selection of the individual stocks, bonds, mutual funds or other investments deemed most appropriate for each individual client’s portfolio.

Market Update: Investors Stay Upbeat Despite Government Shutdown

October 6, 2025 

Markets continue to show strength even as the federal government shutdown halts key economic reports. With limited data available, investors are relying on private-sector indicators such as ADP’s employment report, which suggests continued softening in the labor market. Despite uncertainty, the S&P 500 has extended its winning streak as optimism holds.

In this week’s Market Update, we cover:

• The impact of the federal shutdown on economic reporting
• What ADP’s private jobs data reveals about hiring trends
• Why investors remain optimistic despite uncertainty
• Historical context on previous shutdowns and GDP impact
  
  

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Video Summary: 

Well, normally I'd spend our time together this week talking about the monthly jobs report that was supposed to come out on Friday. As we know, we didn't get it because of the government shutdown. We have not been receiving the public data releases as scheduled because of the shutdown. But last week, we did get data from AADP. 

It's the monthly jobs number that they provide. They provide a look at private sector employment, and that came out middle of last week, and it really just confirmed what we already know about the labor market. Things are, are not great. We're not seeing an environment where there are mass layoffs, but there's also a lack of hiring. 

And so this certainly has the fed's attention. This has our attention. If we look at the data that came out, the number was actually pretty disappointing, and expectations were actually pretty modest coming into this, and it actually came in below expectations. So we saw about 30,000 jobs were lost in the most recent month. 

And we saw a downward revision to the prior month into slightly negative territory as well. So again, confirms the weakness that we're already seeing, and that is on the mind of those at the Fed. Now, what I will say about this is that, as I mentioned, this is private sector employment; it does not include government employees. 

Federal workers, and it actually only covers about 20% of the workforce. And so it's not a great read, but the story is really consistent with other data that we've been seeing, and really, in this environment, we'll have to take the data that we can get because we know that we're not getting a lot of the other sources of data that we have come to rely upon. 

So in a way, we are flying blind here. Now that doesn't seem to mind. Investors, if you look at the S&P 500, it is continuing to hit these all-time highs. We actually saw six. Increases consecutive increases in the S&P 500. That's through Friday's close. We are on pace for a seventh consecutive upward close today. 

In a positive market, that would be the longest streak going back to early May. And so. You know, there, the, the investors don't seem to really mind right now. There's no telling when they will. We know that the longer this goes on, it will weigh on confidence. It weigh, will weigh on the psyche of investors. 

And so, it won't matter until it does. But we know that things also don't go up in a straight line. We know that the Senate is actually voting today on a stopgap measure to end this government shutdown. We do not expect it to pass. Last I saw, they needed five Democrats, five additional Democrats, eight total to vote in favor of this, and I don't think they have the votes currently. 

And I, I think part of this, I, I think a lot of people are attributing this to the fact that the market's up and no one really feels the pressure just yet. They're still. They're still really digging in, and no one really feels ready to negotiate. Will it be? Will they need to see [00:03:00] a hit in the polls? 

Will they need to to see a hit in the stock market and an impact on that wealth effect before, , they actually, the two sides come together? I think that's one of the big questions. We are watching the poly market data, which is the betting markets, and that shows. That, that, in the best markets, they're actually showing a 65% chance that this government shutdown lasts between 10 and 29 days. 

A 30% chance, approximately, that this government shutdown lasts 30 days or more. So it appears that most are, are, really settling in here and expecting this thing to drag on. Now, fortunately, we know that the economic impact is, has historically been relatively modest. About 25% of government spending is actually on hold right now. 

That's what's associated with discretionary spending. So I mentioned last week, things like Medicare, Medicaid, and Social Security. Those are mandatory spending. That is the bulk of government spending, and that continues to get done. , [00:04:00] and it's really the discretionary spending that, that is, that we see is they, they hold off on during these government shutdowns. 

And so what does that mean for the economy? Why? Are investors so far looking past this? Well, it's because on a weekly basis, what we've seen historically is that the economy takes about 0.1 to 0.2% off of economic growth. That's on a quarter-over-quarter basis. To put some, to put that into financial terms. 

The Congressional Budget Office, the CBO, following the government shutdown that started in December 2018, went into 2019, lasting about 34 days in total. The CBO estimated that it took about $3 billion from economic growth. Now, 3 billion is a big number, but. In the context of a $30 trillion economy, it's not so large. 

And so that is one thing that we are reminding ourselves of. Now, [00:05:00] obviously, the longer this goes on, the bigger the economic impact will be, the bigger the hit and damage to businesses, to consumers, could ultimately be. And so that's why we certainly hope that those who are. Participating in the betting markets is wrong. 

And, and this doesn't last too much longer, but for now, just know we'll be keeping an eye on things. I'll leave it there for right now, and I'll look forward to catching up with you next week.