US stock futures pulled back as the US government entered a shutdown beginning Wednesday at 12:01 a.m. ET.
Futures attached to the Dow Jones Industrial Average (YM=F) and the benchmark S&P 500 (ES=F) dropped 0.8%, while contracts on the Nasdaq 100 (NQ=F) sank 1%.
At 12:01 Wednesday morning, the government entered shutdown after the Senate struck down both a Democratic and a Republican bill to keep the government funded.
If a stoppage proceeds as expected, it will mark the first government shutdown in nearly seven years. 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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