Influenced by escalating trade war risks and the ongoing US federal government shutdown, market sentiment rapidly deteriorated, leading to a "Black Friday" for US stocks last week. The S&P 500 Index, Nasdaq Composite Index, and the small-cap-focused Russell 2000 Index all recorded their worst single-day performance since April 10, while the Dow Jones Industrial Average posted its worst single-day performance since May. After encountering massive selling pressure last Friday, US stocks will enter the second complete trading week following the federal government shutdown.

In the upcoming week, due to the ongoing political gridlock in Washington, the market will be unable to obtain updates on several key economic data points, including import prices, retail sales, hourly wages, and initial jobless claims. Given that the Federal Reserve's Federal Open Market Committee (FOMC) will enter the pre-meeting quiet period starting Saturday, October 18, ahead of the October policy meeting, if Congress fails to reach an agreement on government reopening by this Friday, the Federal Reserve will enter the quiet period lacking substantial economic data.

More significantly, a new round of US stock earnings season will kick off this week, with the performance of six major US banks taking the spotlight: JPMorgan Chase (JPM.US), Goldman Sachs (GS.US), Morgan Stanley (MS.US), Bank of America (BAC.US), Citigroup (C.US), and Wells Fargo (WFC.US). The market currently expects these six major banks to deliver strong third-quarter performance, benefiting from a robust recovery in investment banking business and the resilience of the US economy keeping borrowers in good condition while supporting consumer and commercial lending divisions.

Additionally, investors will also focus on the latest earnings reports from companies including Taiwan Semiconductor (TSM.US), Johnson & Johnson (JNJ.US), and Domino's Pizza (DPZ.US).

**US Government Shutdown Continues**

Last Friday's market plunge indicated that Trump's tariff threats remain influential. Meanwhile, the government shutdown's impact on major stock indices appears relatively mild, with Deutsche Bank describing its market impact as "negligible."

Major credit rating agencies have previously indicated that government shutdowns like the current one would negatively impact US Treasury ratings. However, Jeff Buchbinder, Chief Equity Strategist at LPL Financial, stated that given rating agencies have already downgraded based on political instability over the past few years, such an outcome is essentially "ruled out."

In negotiations to reopen the government, the healthcare sector could emerge as the biggest winner or loser this round. The main disagreement between both parties in Congress centers on Affordable Care Act (ACA) subsidies, which are set to expire at year-end. Democrats want to allocate over $1 trillion to extend subsidies, while Republicans advocate letting them expire.

For major health insurers like UnitedHealth (UNH.US) and Humana (HUM.US), if subsidies end, millions of Americans might drop coverage, and more might forego insurance entirely, creating gaps in customer base. For companies focused on ACA plans like Centene (CNC.US), subsidy termination could mean significant profit margin hits.

The market is particularly sensitive to this. Last Tuesday, when Trump posted on social media expressing "optimism" about subsidy negotiations, healthcare stocks rose overall.

Another potential impact of the government shutdown is a surge in job applications from the private sector. According to Indeed data, as of October 9, job applications initiated by federal employees were 157% higher than January 1 levels and 132% higher than the same period last year.

White House Office of Management and Budget Director Russ Vought promised massive layoffs rather than the previous "unpaid leave with back pay" arrangements. Layoff actions officially began last Friday evening.

However, LPL Financial noted in a recent report that private sector employers might also be reluctant to increase hiring due to difficulties in obtaining federal loans.

**"Rare Earth Renaissance"**

Following China's announcement of measures to strengthen rare earth export controls late last week, previously stable rare earth mining company stocks suddenly surged. Last week, MP Materials (MP.US), the only major rare earth mine operator in the US, saw its stock price rise over 9%, while mining company Trilogy Metals (TMQ.US) cumulatively surged over 185% due to Trump administration investment announcements.

Other beneficiaries included USA Rare Earth (USAR.US), which gained over 25% for the week, and international mining giant Freeport-McMoRan (FCX.US), which rose 3% for the week.

Ryan Castilloux, Founder and Managing Director of rare earth research firm Adamas Intelligence, stated at a mineral industry conference: "The West is experiencing a Rare Earth Renaissance."