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 0.5%, while those on the S&P 500 (ES=F) fell roughly 0.6%. Contracts on the tech-heavy Nasdaq 100 (NQ=F) slid about 0.7%.
Stocks closed out their strongest third quarter since 2020 on Tuesday, but the mood has turned sour as Wall Street weighs the likely economic impact of the shutdown. The longer it lasts, the greater the likely hit to growth, as the fallout reaches the businesses that rely on the federal government’s daily output.
Twin Senate votes on Tuesday failed to advance either a Democratic or a Republican bill to keep the government funded, triggering the stoppage at 12:01 a.m. ET. Federal agencies will now implement contingency plans and send hundreds of thousands of workers home, amid warnings from President Trump that “a lot” of firings are to come.
Markets are watching the developments closely. Among the agencies whose work is set to be frozen is the Bureau of Labor Statistics, which gathers and reports economic data key to Federal Reserve policy decisions.
The BLS is set to release the September jobs report on Friday, in high focus as recent economic data has shaken Wall Street’s confidence that two more Fed rate cuts are coming this year. But the nonfarm payrolls update is likely to be delayed, as BLS plans to “completely cease operations” with just one full-time employee kept in post.
The spotlight is now on private economic data to take on a bigger role. ADP private payrolls due later will shed light on the jobs market in September, while MBA’s weekly mortgage applications and S&P Global’s monthly reading of US manufacturing activity are the docket.