Markets Wobble as Shutdown Ends

The government shutdown in the US was lifted, but US inflation data had not been published yet, so there was not enough bullish sentiment to continue driving markets higher.

Markets were rattled on Thursday as investor sentiment abruptly shifted toward caution, sparking a sharp pullback in many of the year’s strongest stocks and intensifying the ongoing decline in cryptocurrencies. The S&P 500 dropped 1.7%, and the Nasdaq 100, dominated by tech names, fell by 2%.

Bitcoin had slid below $97, and the sentiment for Gold had cooled down later on Thursday as well. The probabilities of the Fed’s rate cut in December have cooled down, having reached equilibrium, as more traders doubt the rate cut amid the absence of reliable inflation data. Yields of 30-year bonds held steady at 4.7% level as demand for safe havens diminished amid improving market sentiment.

At the same time, the improvement in market sentiment was temporary – market breadth for the US stock market remains at a relatively low level, indicating insatiable speculative demand, fueling mostly AI-related stocks, while other sectors struggle to gain momentum.

A key driver of Thursday’s turbulence was the growing uncertainty around the Fed’s next policy move. The central bank is navigating a complex mix: inflation remains uncomfortably high, while labor-market indicators point to a gradual loss of momentum. Under normal conditions, policymakers would lean on a steady flow of economic data to calibrate their stance — but the record-long government shutdown has disrupted that process. With several major reports delayed or canceled, the Fed is effectively operating with limited visibility, amplifying market nervousness and widening the range of possible outcomes.

Now, let’s switch to the technical picture for Gold and Nasdaq and try to understand the possible development of the situation for both markets.

XAU/USD

Gold had retraced from the local peak, having been pushed down by the jittering markets across the board. The next possible support is located in the $4000 area, between the 20 and 50-day moving averages. Volume has been growing for GC futures, according to the CME Group’s statistics, so either bearish or bullish pullbacks might be volatile.

The absence of macroeconomic drivers amid the government shutdown creates uncertainty about inflation and other economic metrics in the US, so the asset is expected to trade technically, staying within a trading range.

Nasdaq

Nasdaq is being pushed down, driven by rising concerns about the valuations of AI companies despite strong earnings from NVDA and other giants. Volatility (VIX) stays near 20, but the hard landing for Nasdaq might boost it and lead to another several days of bearish rally, as shown in the chart. According to statistical studies, bearish swings for the Nasdaq rarely last for more than 19-20 days, so if it continues to move down, it might reverse in 5-10 days at the statistical support level, as shown in the chart.