A risk-off week on Wall Street is drawing to a close, with some of the most-expensive areas of the market driving stocks lower while a renewed slide in crypto leaves the asset class barely up for 2025.
While the US payrolls report was not released this Friday due to the shutdown, a survey conducted by 22V Research showed that a labor-market unwind is the biggest risk to trading. That explains why risk assets and bond yields have been unusually sensitive to any news data on that front.
The S&P 500 fell to around 6,670. The Nasdaq 100 slid 1.1%. A gauge of the Magnificent Seven megacaps sank 1.8%.
Bitcoin extended this week’s slide to 9%. The yield on 10-year Treasuries was little changed at 4.09%. The dollar lost 0.2%.
“While there is no jobs report Friday due to the government shutdown, there is enough private payroll and layoff data to suggest that the labor market is cooling,” said Glen Smith at GDS Wealth Management. “This cooling keeps the Fed’s rate cut plans alive for December and potentially into early 2026.”
The economy remains on an upward trajectory even if economic growth slows toward trend levels in 2026, according to Seema Shah at Principal Asset Management.
“The bigger concern — and the key focus of the Fed’s debate —will be the health of the labor market,” she said. “We anticipate the Fed will continue to implement rate cuts to prevent any weakness in employment from accelerating. Much of the market’s optimism hinges on the assumption that policymakers will maintain some level of support.”
“I’m not saying that risk/reward is overly compelling, nor that this is an ideal location to add a bunch of incremental risk,” the head of hedge fund coverage at Goldman Sachs wrote in a note to clients Wednesday. “Looking forward, I’d argue the balance of risks still points in favor of the bulls.”
