U.S. stock index futures remained steady after Wall Street recorded a strong rally, despite mounting concerns about a potential government shutdown and labor market pressures. Technology stocks continued to lead the rebound, driven by sustained optimism in artificial intelligence investment, while investors remained cautious amid macroeconomic and policy-related risks.
Earlier, Wall Street hit new highs as the S&P 500, Nasdaq, and Dow Jones all advanced in the previous session, overcoming headwinds from U.S. government issues. Analysts noted that the rally appeared “somewhat thin,” with many investors taking profits following recent strong gains. Technology shares were the main driver behind the rise, particularly chipmakers boosted by fresh AI-related news. Tesla was an exception, falling more than 5% despite solid Q3 sales, as concerns grew over a potential reduction in electric vehicle tax credits. In the futures market, the S&P 500 hovered around 6,767.25 points, Nasdaq 100 at 25,114.50 points, and Dow Jones 30 futures near 46,807.0 points.
The looming U.S. government shutdown has become a pressing concern. Treasury Secretary Scott Bessent warned that this shutdown could have a heavier impact on the economy than previous ones, potentially hurting GDP, growth, and the labor market. The government has already entered its third day of closure, after Congress failed to approve new funding, deepening the budget stalemate. Historically, past shutdowns had limited effects, but this episode is seen as more severe, especially given the economy’s current sensitive state.
Another significant consequence is the delay in the release of non-farm payroll data, a crucial indicator for the Federal Reserve’s monetary policy decisions. As a result, alternative labor market signals such as the ADP private-sector employment report and Challenger’s layoff data are drawing more investor attention. Challenger’s report indicated a decline in layoffs in September, while ADP data suggested weakening private-sector hiring demand. Employment—or the lack thereof—remains one of the key factors for the Fed in determining whether to continue cutting interest rates.
In the markets, the Fed is still expected to lower rates by another 25 basis points in October, provided labor demand and wage growth remain reasonably stable. Nevertheless, U.S. equities now face multiple challenges: the pace of recent gains has slowed, and sector divergence has become more pronounced. With political, fiscal, and employment risks all surfacing at once, caution may return, potentially undermining the sustainability of the current rally.
Leave a Reply