Stocks closed mostly higher on Friday, led by the small-cap Russell 2000 with a 0.72% gain. But all of the major indexes were up for the week.

The government shutdown enters its 6th day today.

But as I wrote last week, the market doesn't seem to care that much. And that's because shutdowns, historically, have had little impact on the market.

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%. 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 prior to that, and stocks had been falling for months before.

In other news, last Friday's always important Employment Situation report was not released due to the shutdown. Reports produced by government agencies are all on hold until the government reopens.

But we did get the PMI Composite report, as that's produced by a private organization. The Composite Index came in at 53.9 vs. last month's 54.6 and views for 53.6. The Services Index (part of that report), came in at 54.2 vs. last month's 54.5 and estimates for 53.9.

The ISM Services Index (also produced by a private organization) came in at 50.0 vs. last month's 52.0 and expectations for 51.6.

While we'll still get a fair number of reports on the economy, key reports regarding employment and inflation will remain on hold.

In the meantime, earnings season is just around the corner. Actually, while it doesn't officially begin until October 22^nd when Alcoa reports after the close, it unofficially begins next week when big banks (and others) start reporting.

Earnings season is always an exciting time since stocks typically go up during earnings season.

And with the outlook for earnings over the next 4 quarters pointing to continued growth, we could see it usher in a new leg up in the market.

Q3 earnings are forecast at 5.5%.

Q4 is forecast at 7.2%.

Q1'26 is forecast at 9.5%.

And Q2 is forecast at 10.7%.

And that comes on the heels on Q2's better-than-expected GDP report, which came in at 3.8% vs. the consensus for 3.3%, not to mention upward revisions by the Fed for increased economic growth both this year and next.

Couple that with last month's tamer inflation reports, the resiliency of the economy, 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, and I'm expecting a strong finish to the year.

Especially given that Q4 is considered the best quarter for stocks.

So make sure you're taking full advantage of it.

See you tomorrow,