Before the bell: Cyclicals lead as shutdown risk looms

Introduction#

U.S. equities head into Monday, September 29, 2025 with a cautiously constructive tone after a broad advance to close last week. According to Monexa AI, the S&P 500 (^SPX) finished Friday at 6,643.70 (.+0.59%), the Dow Jones Industrial Average (^DJI) at 46,247.29 (.+0.65%), and the Nasdaq Composite (^IXIC) at 22,484.07 (.+0.44%). The NYSE Composite (^NYA) added .+0.66% to 21,477.51. Volatility signals were mixed: the CBOE Russell 2000 Volatility Index (^RVX) fell .-6.44% to 21.63, while the CBOE Volatility Index (^VIX) rose .+4.58% to 15.99. Breadth favored cyclicals, basic materials, energy, and utilities, while mega‑cap technology showed dispersion—gains in mid/small software and select chips offset modest weakness in a few household names.

Overnight, the market conversation centered on the U.S. federal government funding deadline, with commentary framing the typical market resilience to shutdowns but noting unique risks this time, including the potential delay of key data releases like the September jobs report and knock‑on effects to procurement and contractor payments. Coverage from Barron’s and Reuters flagged the deadline dynamics and how they may complicate the week’s data cycle. Separately, Bloomberg highlighted improving sentiment toward Chinese equities, while Reuters reported a pre‑market pop in U.S. cannabis shares after a weekend endorsement of cannabidiol’s potential benefits for seniors by President Trump, a policy‑sensitive headline that could spark early rotation in that complex.

Market Overview#

Yesterday’s Close Recap#

According to Monexa AI, cyclical leadership set the tone into the weekend. Basic materials and energy rallied alongside industrials and consumer cyclicals, a pattern consistent with rising growth expectations and easing policy tailwinds. Utilities also outperformed, which—paired with a higher ^VIX—signals investors are still hedging tail risks even as they add risk exposure. Technology advanced in aggregate but with notable dispersion: strength in mid-cap software and gaming offset softness in select mega‑caps. The largest single‑name outlier was Electronic Arts EA, up +14.87%, while Oracle ORCL fell -2.70%.

Overnight Developments#

Weekend and Monday morning headlines concentrated on three fronts that could shape the open. First, shutdown risk remains front and center. Reporting from Reuters and Barron’s emphasized that while historical shutdowns often have limited market impact, the timing could be different this week if it disrupts the flow of labor data and agency operations critical to near‑term economic visibility. Second, a more constructive tone in Asian equities was highlighted by Bloomberg, with presenters noting why China’s markets have rekindled interest—potentially supportive for global cyclicals and commodity‑linked U.S. sectors. Third, industry‑specific headlines may trigger idiosyncratic moves: Reuters cited a pre‑market bounce in U.S. cannabis shares after President Trump’s CBD remarks; Indonesia’s antitrust regulator fined TikTok for late reporting on the Tokopedia deal, a reminder of regulatory overhang in the global internet supply chain; and Reuters and other outlets chronicled the rising odds that this week’s nonfarm payrolls print may arrive on an atypical schedule if a shutdown occurs.

Macro Analysis#

Economic Indicators to Watch#

The week ahead is heavy on policy‑sensitive catalysts. As summarized by Monexa AI’s news composite and Seeking Alpha’s Wall Street Breakfast briefing, investors will parse incoming labor data and inflation signals while weighing Federal Reserve guidance against shutdown risk. Multiple overnight pieces, including Bloomberg, noted that traders continue to price further easing after September’s 25 bp cut, framing a constructive backdrop for rate‑sensitive pockets such as housing‑adjacent REITs and utilities, and for economically sensitive cyclicals if growth holds up. Barron’s warned the September jobs report could be delayed if the government shuts down, an outcome that would muddy near‑term macro reads just as positioning leans more pro‑cyclical.

The policy calendar also intersects with key company events. Tesla TSLA is slated to report third‑quarter deliveries this week, with Monexa AI aggregating street expectations around ~445,000–448,000 and a more bullish cohort closer to 461,500 or higher (Deutsche Bank raised its price target to $435 and reiterated Buy). A strong print could reinforce the recent cyclical bid and AI‑adjacent enthusiasm; a shortfall would quickly test momentum in high‑beta growth.

Global/Geopolitical Factors#

Policy and geopolitics are weaving directly into sector tapes. The U.S. shutdown showdown is the primary domestic risk; even if resolved, the process could dent confidence and delay data. Trade and regulatory headlines remain active: Indonesia’s antitrust authority fined TikTok for tardy filing on its Tokopedia deal, underscoring the compliance friction global platforms face in key Asian markets (Reuters). In the U.S., Vice President JD Vance suggested TikTok’s U.S. operations have been effectively separated from China parent ByteDance, a statement that, if reflected in policy follow‑through, could influence ongoing bids reportedly circling the asset—one driver of recent moves in Fox Corporation FOXA. Meanwhile, Bloomberg highlighted renewed investor interest in Chinese equities, which often correlates with U.S. basic materials and energy strength.

Sector Analysis#

Sector Performance Table#

According to Monexa AI sector data, leadership on Friday tilted toward cyclicals and commodities. Basic materials’ outperformance was broad, with lithium, chemicals, fertilizers, and steel rising in tandem. Albemarle ALB jumped +3.85%, Dow DOW climbed +3.42%, CF Industries CF rose +2.70%, and steel bellwethers Steel Dynamics STLD and Nucor NUE added +2.60% and +2.50%, respectively. This mix points to improving demand expectations and ongoing support from commodity pricing. Energy advanced as well, with Devon Energy DVN up +3.44%, ConocoPhillips COP up +1.73%, oil‑services leader SLB SLB up +2.69%, and Exxon Mobil XOM up +1.41%. The basket’s breadth suggests the move wasn’t purely oil‑price beta but included services and upstream capacity narratives.

Utilities were the top aggregate mover, an unusual companion to cyclicals in a risk‑on tape. Pacific Gas & Electric PCG rallied +3.71%, NRG Energy NRG gained +3.44%, Vistra VST added +2.78%, and FirstEnergy FE rose +2.69%. The simultaneous strength of utilities and cyclicals aligns with a falling rate‑expectations narrative benefiting income assets while the growth outlook remains constructive.

Technology advanced modestly, though leadership was dispersed. Electronic Arts EA surged +14.87% on media reports of a potential go‑private transaction; AppLovin APP rose +4.68%; Intel INTC gained +4.44%; Microsoft MSFT added +0.87%; and Oracle ORCL slipped -2.70%. The dispersion underscores a near‑term concentration risk: mega‑cap prints like Apple and Oracle can tug the index even as mid‑cap software outperforms. In communication services, Alphabet GOOGL rose +0.31% while Meta META dipped -0.69%, and Warner Bros. Discovery WBD fell -1.37%.

Healthcare was firmly bid, led by distributors and medtech. McKesson MCK gained +3.26%, Cardinal Health CAH rose +3.19%, Danaher DHR added +1.86%, and Eli Lilly LLY climbed +1.39%. Consumer defensive lagged, dragged by Costco COST -2.90% despite a quarterly beat, even as niche staples like Lamb Weston LW +4.52% and Estée Lauder EL +3.18% rallied. Real estate posted a small gain with REITs firming—Public Storage PSA +2.15%, Welltower WELL +1.86%, AvalonBay AVB +1.72%, and Prologis PLD +0.87%—though select office and tower names underperformed.

Company‑Specific Insights#

Earnings and Key Movers#

Tesla TSLA rose +4.02% to $440.40 on Friday as anticipation builds into its Q3 deliveries update due this week. Deutsche Bank lifted its price target to $435 and reiterated a Buy, citing deliveries potentially above consensus and renewed focus on embodied AI initiatives (Monexa AI; Deutsche Bank note summarized in Monexa’s feed). Monexa’s research composite places Q3 delivery expectations around 445,000–448,000 with a bull case at 461,500 or more, supported by the refreshed Model Y, China’s improving tone, and a potential pull‑forward of U.S. demand into the September 30 tax‑credit expiration. The setup implies elevated volatility at the print, and investors should be mindful of a possible Q4 air‑pocket if incentives lapse and Europe stays soft.

Costco COST closed -2.90% at $915.95 despite reporting fiscal Q4 earnings per share of $5.87 on revenue of $86.16 billion, both ahead of consensus (Monexa AI). D.A. Davidson set a $1,000 target, citing quality and consistency but acknowledging valuation friction at over 50x forward earnings (Monexa AI). The stock’s reaction illustrates a broader theme in staples: even beats are struggling to power multiples higher unless accompanied by incremental growth drivers beyond price and traffic, which keeps the group tactically out of favor versus cyclicals.

Concentrix CNXC fell -13.33% after its adjusted EPS of $2.78 missed expectations, overshadowing a revenue beat at $2.48 billion and raised outlook (Monexa AI). Margins compressed year over year—adjusted operating margin to 12.3% from 13.9%—and adjusted EBITDA margin to 14.5% from 16.3%. In this tape, profitability trajectories matter more than top‑line outperformance; investors will likely wait for stabilization in margins before re‑rating the shares.

Electronic Arts EA jumped +14.87% to $193.35 on reports it is exploring a go‑private deal that could approach $50 billion, according to multiple media outlets over the weekend. While no definitive agreement has been announced, the price action forced fresh attention on video‑game IP valuations and the cash‑flow durability of top franchises. Until there is formal disclosure, we would treat the pop as event risk rather than a sector‑wide re‑rating catalyst.

Fox Corporation FOXA gained +1.53% after Guggenheim set a $68 target and as reports continued to swirl about a consortium bid for TikTok’s U.S. operations. The regulatory path remains a key swing factor; the prospective asset would be scale‑changing, but the approval stack is non‑trivial. In parallel, Indonesia’s competition authority fined TikTok for late reporting on the Tokopedia deal (Reuters), illustrating how multi‑jurisdictional oversight can impact transaction timelines and integration.

Oracle ORCL fell -2.70% to $283.46, a meaningful drag within mega‑cap software despite upbeat AI infrastructure headlines, including additional U.S. data‑center sites under the Oracle/OpenAI/SoftBank “Stargate” banner and Oracle Financial Services’ validation as a Swift Compatible Application for payments in 2025. The stock’s reaction speaks to high expectations embedded in AI‑compute narratives; execution milestones are being discounted more granularly now, and valuation sensitivity has increased across the largest AI beneficiaries.

Across mega‑cap tech and consumer platforms, Microsoft MSFT rose +0.87% to $511.46, Alphabet GOOGL added +0.31% to $246.54, Amazon AMZN gained +0.75% to $219.78, and Meta Platforms META slipped -0.69% to $743.75. The mix is consistent with the “dispersion‑within‑tech” theme: while AI capex and platform scale underpin sentiment, idiosyncratic product cycles and regulatory risk keep single‑name paths bumpy.

In consumer cyclicals beyond autos, Expedia EXPE rose +3.57%, Ford F added +3.40%, and Amazon AMZN held a +0.75% gain, suggesting travel and discretionary demand remain resilient. eBay EBAY fell -2.12%, an outlier that underscores the intra‑group dispersion. Industrials were buoyant, with Boeing BA +3.62%, Paccar PCAR +5.16%, RTX RTX +1.77%, and Union Pacific UNP +1.38%. Financials showed healthy participation: Berkshire Hathaway BRK-B +1.02%, Raymond James RJF +2.21%, FactSet FDS +2.05%, and Coinbase COIN +1.92%, partially offset by weakness in KKR KKR -1.22%.

Within real assets and income, The Macerich Company MAC rallied +6.80% after a BofA upgrade to Buy, with analysts citing portfolio quality improvements, deleveraging prospects, solid leasing progress, and a clearer growth path for NOI and FFO into 2027–2028 (Monexa AI). HB Fuller FUL added +2.05% on a Seaport Global upgrade to Buy and a call for stronger EBITDA in fiscal 2025 via cost and mix tailwinds, including demand from data‑center construction (Monexa AI). Energy services bellwether SLB SLB gained +2.69%, aligned with a broader uplift in oilfield activity proxies.

Cannabis equities are set for early attention. While Tilray Brands TLRY closed -3.36% Friday at $1.15, Reuters reported a sharp pre‑market bounce across U.S. cannabis names Monday after President Trump endorsed CBD’s potential benefits for seniors over the weekend. Policy‑linked bursts in the group have been short‑lived in prior cycles; durability hinges on regulatory follow‑through, not just rhetoric.

Extended Analysis#

The broader market is wrestling with a healthy but delicate rotation. On one side, a soft‑landing narrative supported by rate‑cut expectations is powering cyclicals, materials, energy, and select financials despite persistent macro ambiguities. On the other, the most extended corners of mega‑cap tech are increasingly hostage to single‑stock valuation debates. Friday’s tape—utilities up alongside industrials and materials—captures this nuance: investors want growth exposure, but they also want yield and ballast.

Two cross‑currents merit close monitoring this week. First, concentration risk hasn’t vanished. According to Monexa AI’s heatmap, technology remains the largest slice of U.S. market cap at roughly one‑third, yet Friday’s leadership came from mid‑cap software and gaming while several mega‑caps were flat to down. If heavyweights like Oracle ORCL and Apple (mixed in the latest session) tread water while cyclicals rally, index performance can remain positive, but upside convexity compresses and day‑to‑day beta becomes more sensitive to sector rotation.

Second, fundamentals beneath the surface are not uniformly strong. A weekend analysis flagged that corporate profits in non‑financial industries saw sizable downward revisions, including a double‑digit plunge in wholesale trade profits in Q2 and year‑over‑year declines across several categories. That tension—market leadership broadening even as parts of the profit base wobble—argues for selectivity. It also argues for confirming signals from this week’s labor and inflation data, which could be complicated by a shutdown‑induced delay.

For AI and EV narratives, the near‑term inflection remains Tesla TSLA. Street consensus around mid‑to‑high‑400,000 deliveries for Q3 sets a high bar, particularly if U.S. demand was pulled forward ahead of incentive deadlines. Deutsche Bank’s $435 target and the stock’s +4.02% Friday print reflect optimism around both near‑term units and longer‑term AI optionality—robotaxi and Optimus included—but the market will demand corroborating data. Price discipline and ex‑credit margin stabilization in Q3/Q4 could be the difference between consolidating near highs and a de‑rate.

Last, policy remains the wild card. The shutdown calculus intersects with market microstructure: a delayed jobs report would raise near‑term uncertainty just as positioning rotates into higher beta. Meanwhile, sector‑specific policy sparks—from CBD commentary to data‑privacy scrutiny on social platforms—can produce sharp, fleeting moves. Until rhetoric is codified into rulemaking, investors should treat such bursts as trading opportunities rather than durable investment pivots.

Conclusion#

Morning Recap and Outlook#

Heading into the open, the equity market’s baseline is constructive but tactical. According to Monexa AI, major indices closed Friday higher with ^SPX at 6,643.70 (.+0.59%), ^DJI at 46,247.29 (.+0.65%), and ^IXIC at 22,484.07 (.+0.44%). Cyclicals, materials, energy, and utilities led, while tech advanced with mixed mega‑cap participation. Overnight headlines center on the shutdown deadline, an improving tone in China equities, and event‑driven stories in cannabis, internet platforms, and gaming that may shape early flows. The immediate catalysts are clear: the shutdown path, this week’s labor data timing, and Tesla’s deliveries report.

For positioning, investors should watch whether Friday’s breadth can carry into Monday without the help of mega‑cap engines. If basic materials and industrials continue to rally while utilities remain firm, the market is affirming a “growth with a safety net” posture that often extends advances but can cap upside if tech leadership doesn’t re‑engage. Keep an eye on volatility: ^VIX at 15.99 and ^RVX down to 21.63 send mixed signals—index hedging rose, but small‑cap volatility compressed—which argues for maintaining balanced exposures.

Across single names, the focus remains on Tesla TSLA, Costco COST, Electronic Arts EA, Fox FOXA, and Oracle ORCL. A Tesla beat versus elevated expectations could extend the cyclical/AI impulse; a miss would likely hit autos and broader growth. For staples, Costco’s valuation reaction despite a beat reinforces a relative‑value tilt away from richly priced defensives near term. In software and platforms, Oracle’s drift despite positive AI headlines suggests the market wants tangible revenue capture cadence, not just capacity announcements.

In sum, the tape favors measured risk‑on with hedges. Maintain core exposure to quality cyclicals and value within industrials, materials, and energy; keep a diversified technology sleeve but avoid excessive single‑name concentration; and use utilities/REITs for income and ballast while watching rates. With policy and data in flux, agility matters more than heroics into the open.

Key Takeaways#

The prior session closed with broad gains led by cyclicals, materials, energy, and utilities, while technology’s advance was dispersed across mid‑caps rather than dominated by mega‑caps. According to Monexa AI, ^SPX ended at 6,643.70 (.+0.59%), ^DJI at 46,247.29 (.+0.65%), and ^IXIC at 22,484.07 (.+0.44%). Overnight, shutdown risk, China’s tone improvement, and policy‑linked cannabis headlines set the early mood.

The most actionable catalysts into the open are the shutdown path and Tesla’s deliveries report. Deutsche Bank’s $435 target underlines high expectations for TSLA; outcomes versus consensus should steer autos and broader growth risk in the very near term. In staples, Costco’s -2.90% reaction to a beat signals valuation sensitivity across defensives. In software, Oracle’s -2.70% despite positive AI infrastructure news shows that investors are demanding proof of monetization.

Positioning that leans toward quality cyclicals and real‑asset cash flows, complemented by a diversified but not over‑concentrated technology sleeve and utility/REIT ballast, remains the prudent baseline as we navigate a week defined by policy and data uncertainty.