Stocks closed higher yesterday, led by the S&P with a gain of 0.41%. The Dow, however, made a new all-time high close in the process. The S&P was close, but had to settle for their second highest close. Same for the Nasdaq.

But yesterday being the last day of the month, all of the indexes had a stellar September.

For the month, the Dow was up 1.87%, the S&P was up 3.53%, the Nasdaq was up 5.61%, and the small-cap Russell 2000 was up 2.96%.

That was the 5th up month in a row for the Dow, S&P and Russell, and the 6th up month in a row for the Nasdaq.

Ironic, given that September is historically considered the worst month for stocks.

But not surprising given the tame inflation reports, the resiliency of the economy, the better-than-expected earnings (not to mention the positive EPS growth outlook for the next four quarters), the recent interest rate cut and the two additional cuts expected in mid-October and then again in December, and of course, the ongoing AI boom!

In other news, it looks like a government shutdown. But as I mentioned yesterday, the market, so far, doesn't seem to care. In fact, it was looking like a shutdown for weeks, and the market soared.

Since 1980, there have been 14 government shutdowns (10 if you exclude technical shutdowns, i.e., procedural delays, etc., that lasted less than 24 hours). The average length of those shutdowns is 9 days. The longest one was in 2018/2019 and lasted 35 days. 1995/96 was next at 21 days. And 2013 was third at 16 days. Other than that, they've usually lasted about 2-3 days.

During those shutdowns, the S&P averaged a gain of 1.69% (median of 1.1%). A full 9 of those 10 times was higher. Only decline was in October 1990, when it lost -3.60%. The government shut down for only 3 days. But recession fears had gripped the market, and stocks had been falling for months prior to that.

So, it's no surprise that the market has given shutdown talk a collective shrug. But, of course, we'll have to see how long it lasts and what the impact is.

If the shutdown lasts for the rest of this week, that means we won't get the highly anticipated Employment Situation report on Friday. The Bureau of Labor Statistics said they would not release reports, or gather data to calculate reports until the shutdown is over. That includes their CPI and PPI inflation reports as well.

And that likely goes for other government agencies that compile other reports.

The shutdown, however, should not affect reports created by non-governmental agencies.

On the economic report docket for today, most are expected to be released, including MBA Mortgage Applications, the ADP Employment report, the PMI Manufacturing report, and the ISM Manufacturing report. The Construction Spending report, however, which is released by the Census Bureau, which is part of the Commerce Department, is not expected to be released.

We'll see how long this lasts.

But with Q3 earnings season just around the corner (it's already 'unofficially' begun), the markets will have plenty of information to focus on. Earnings, after all, are the key driver of stocks.

Today is the first day of October. And while it has a reputation for being the most volatile month, it generally finishes higher.

And Q4 is considered the best quarter for stocks.

So, I'm expecting a fantastic quarter to cap off a fantastic year for stocks.

See you tomorrow,