Trading Day: Shutdown? Stocks up!

By Jamie McGeever

ORLANDO, Florida (Reuters) -TRADING DAY

Making sense of the forces driving global markets

By Jamie McGeever, Markets Columnist?

Wall Street and world stocks rose on Wednesday, reversing early losses on worries over the U.S. government shutdown, as soft private sector U.S. employment data bolstered expectations of further monetary easing from the Federal Reserve.

Not only did stocks rebound, the S&P 500 and MSCI All Country index hit new all-time highs. Investors' "buy the dip" mentality is undimmed, even though a creaking U.S. labor market will surely squeeze consumer demand and corporate profits eventually. But that's not for today, evidently.

If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today.

1. What would it take to end the U.S. government shutdown? 2. U.S. government shutdown: How it affects key economicdata publishing 3. Hit by Trump tariffs, rest of world races to forge newtrade alliances 4. If AI is a bubble, the economy will pop with it: MikeDolan 5. Quarterly reporting, Wall Street's latest test vs Trump:Ross Kerber

Today's Key Market Moves

* STOCKS: Wall Street rises between 0.1% and 0.4%, S&P 500hits new high. MSCI World up for fourth day to new high too. * SHARES/SECTORS: Healthcare outperforms, +3%. Materials-1.2%. Utility group AES shares soar 17% on takeover talk,Corteva is the biggest decliner, -9%. * FX: Dollar weaker, especially vs "safe haven" yen in G10space, although it recovers some ground. Argentina's peso worstperformer, -3%. * BONDS: Safety bid and rate-cut bets boost Treasuries,yields down across the board, as much as 6 bps at short end tobull steepen the curve. * COMMODITIES: New record highs for silver and gold. Oilslides for third day to 4-month lows.

Today's Talking Points:

* U.S. government shutdown

The 15th U.S. government shutdown since 1981 began on Wednesday after Republicans and Democrats failed to reach agreement on funding. Some 750,000 federal workers were ordered not to work, while others, such as troops and border patrol agents, were ordered to work without pay.

Most shutdowns last only a few days, although the last one in President Donald Trump's first term was a record 35 days. A few days of patchy economic activity and data releases will have minimal market impact, but a month would be a different story, right? Perhaps. But it's worth noting that during that record 35-day shutdown, Wall Street's main three indices rose between 11% and 13%.

* Like a broken record

The S&P 500, MSCI All Country equity index, gold and silver all traded at new peaks on Wednesday, and the Dow notched yet another closing record high. Despite mounting evidence of stretched positioning, valuations, and sentiment, nothing seems to be standing in the way of this juggernaut.

The common thread is the prospect of more Fed rate cuts. Traders continue to lean that way, with another 50 bps of cuts this year almost fully in the cards. But it's hard to see more easing being priced absent a sudden deterioration in economic conditions. And that would surely prompt investors to reassess.

* U.S. Supreme Court and the Fed

Federal Reserve Governor Lisa Cook will remain in situ at least for the rest of this year, after the U.S. Supreme Court on Wednesday said it will listen to arguments for her dismissal in January. That means she will be able to vote at the Fed's October and December policy meetings.

Trump is trying to remove Cook over alleged mortgage fraud - the first-ever bid by a president to fire a Fed official - part of a multi-pronged challenge to the Fed's independence. Trump nominee Stephen Miran recently got onto the Fed board, but it's not all going the president's own way.

What could move markets tomorrow?

* Australia trade (August) * Japan consumer confidence (September) * Bank of Japan deputy governor Shinichi Uchida speaks * South Korea inflation (September) * Euro zone unemployment (August) * ECB policymakers Patrick Montagner, Francois Villeroy deGalhau and Luis de Guindos speak at different events * * U.S. weekly jobless claims * * U.S. factory orders (August) * Dallas Fed President Lorie Logan speaks*Only if U.S.government shutdown is resolved

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Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

(By Jamie McGeever; Editing by Nia Williams)