US stock futures pulled back on Wednesday after the US government entered its first shutdown in seven years, putting hundreds of thousands of jobs and billions of dollars in output at risk.
Dow Jones Industrial Average futures (YM=F) dropped roughly 0.7%, while those on the S&P 500 (ES=F) fell 0.8%. Contracts on the tech-heavy Nasdaq 100 (NQ=F) sank about 1%.
At a minute after midnight on Wednesday morning, the government entered shutdown after the Senate struck down both a Democratic and a Republican bill to keep the government funded.
Federal agencies will have to implement contingency plans and send scores of workers home amid threats from President Trump that “a lot” of firings are to come.
Markets are watching the developments closely. Among the agencies set to be frozen by a shutdown is the Bureau of Labor Statistics (BLS), which releases economic data key to Federal Reserve policy decisions.
This week, BLS was set to release the September jobs report on Friday. Fed officials and Wall Street have been eagerly awaiting the update as recent economic data has shaken confidence in more rate cuts coming this year.
However, in the event of a shutdown, all signs point to the jobs report not arriving as scheduled. BLS has said that it plans to “completely cease operations” and temporarily go from a workforce of 2,055 to just one full-time employee.
Stocks on Tuesday, however, brushed off Washington’s gridlock, closing out their strongest third quarter since 2020. Investors also weighed fresh tariffs from the Trump administration alongside upbeat earnings from Nike’s (NKE).
On Wednesday, a government funding lapse will likely dominate investors’ attention even as data on ADP private payrolls and earnings from Levi Strauss (LEVI) are released.
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