U.S. equities sit precariously at record highs while facing a government shutdown, delayed economic data, and tariff threats that can quickly reverse gains. This article examines how missing CPI and jobs reports, the upcoming bank earnings, stretched valuations, and October volatility combine to shrink the market’s margin for error — and what investors should watch in the coming weeks.

“The Fog of Missing Data”

The government shutdown has created a gap in critical economic information. Key releases like the early October jobs report and the consumer price index have been delayed, leaving investors to work with partial signals about inflation and labor market strength.

David Kelly of J.P. Morgan Asset Management called this lack of data a “fog.” Without timely CPI numbers, especially on core goods, analysts and investors are forced to rely on estimates and educated guesses rather than firm evidence.

“Earnings Must Deliver”

Earnings season begins with major banks and will offer the first hard reads on consumer health, spending, and corporate profitability. Reports from JPMorgan, Wells Fargo, Citigroup, Goldman Sachs, Bank of America, and Morgan Stanley will be scrutinized more than usual.

Unusually, analysts have raised their S&P 500 earnings estimates for the quarter — the first increase since late 2021. That means companies must post genuinely strong results to meet elevated expectations, not just eke out modest beats.

“The Valuation Problem”

The S&P 500 has climbed roughly 31.5% from its April low, creating a market priced for near-perfection. High valuations reduce the margin for error: even solid earnings might not be enough to justify current prices.

When valuations are extended, the risk of disappointment rises. Investors should be prepared for heightened sensitivity to any data or news that suggests growth is slowing or costs are rising because prices already embed optimistic outcomes.

“October’s Reputation”

Recent volatility underscores how quickly sentiment can shift. A single selloff erased weekly gains and produced the worst performance during a government shutdown since 1990 — the S&P fell 2.7%, the Nasdaq plunged 3.6%, and the Dow dropped 1.9% in a single session.

October has historically been the year’s most volatile month. Whether recent declines were prompted by tariff threats or simply profit-taking, investors should expect turbulence and avoid complacency.

“The Path Forward”

Despite these concerns, underlying economic fundamentals appear reasonably solid, and the third quarter likely produced decent corporate results. The main question is whether earnings will be strong enough to justify lofty valuations amid ongoing uncertainty.

Investors who have benefited from the rally should remain cautious. Earnings season will provide vital data in the absence of government releases, and those reports will help determine whether today’s bull market rests on firm ground or shifting sands.