Wall Street nosedives as government shutdown risks economic data delays

The main US stock indexes declined on Wednesday as investors digested soft private payrolls data, while a federal government shutdown risked delaying economic data, heightening the uncertainty around the central bank’s next policy move.

Traders sharply increased bets on a 25-basis-point rate cut by the US Federal Reserve at its next meeting after the ADP National Employment Report showed private payrolls dropped the most in two-and-a-half years in September.

The labour market is walking a tightrope because data needs to be soft enough to support rate cuts, yet robust enough to avoid stoking fears of a broader economic slowdown.

“ADP may, for the first time, be a closer indicator of the true level of employment,” said Jamie Cox, managing partner at Harris Financial Group.

“The Trump administration’s policies are trying to transition a lot of the job growth out of the public sector into the private sector.”

At 10:08 a.m. ET, the Dow Jones Industrial Average fell 62.56 points, or 0.14%, to 46,335.33, the S&P 500 lost 21.64 points, or 0.32%, to 6,666.82, and the Nasdaq Composite shed 93.94 points, or 0.41%, to 22,565.63.

Communication services shares on the S&P 500 fell 1.5%, dragged by losses in Meta Platforms and Alphabet , which shed 2.8% and 1.1%, respectively. The stocks also weighed on the Nasdaq.

The S&P 500 tech sector lost 0.4%, with Nvidia down 0.9%.

The healthcare sector hit a more than five-month high and was last up 1.4%. Moderna and Regeneron both rose more than 6.3% and were among the top performers on the benchmark index.

Adding to the uncertainty was the deep partisan rift in Washington that led to a federal government shutdown.

While shutdowns have not derailed markets historically - the S&P 500 rose during each of the last six government shutdowns, according to a note from Deutsche Bank - the current one coincides with elevated stock valuations and a fragile mood.

Prolonged shutdowns also amplify risks. In the seven instances when they lasted 10 or more days, the S&P 500 fell four times and rose thrice, according to data from Vanguard.

The nonfarm payrolls report, scheduled for release on Friday, will now likely be delayed.

Another data point showed US manufacturing edged toward recovery in September, although new orders and employment were subdued.

Bank of Richmond Fed President Thomas Barkin is scheduled to speak later in the day.

In stocks, Nike rose 3.4% a day after reporting surprise revenue growth in the first quarter.

AES gained 13.3%, topping the S&P 500 after the Financial Times reported on Tuesday that BlackRock-owned Global Infrastructure Partners was nearing a $38-billion deal to acquire the utility group.

GE Vernova declined 2.1% after RBC Capital Markets downgraded the power-equipment maker’s rating to “sector perform” from “outperform”.

Corteva said it would separate its seed and pesticide businesses into separate publicly traded companies. Its shares were down 7.2%, at the bottom of the S&P 500.

Advancing issues outnumbered decliners by a 1.12-to-1 ratio on the NYSE and by a 1.06-to-1 ratio on the Nasdaq.

The S&P 500 posted 17 new 52-week highs and two new lows, while the Nasdaq Composite recorded 57 new highs and 33 new lows.

Oil prices fell on Wednesday, extending losses from the previous two sessions, as investors weighed OPEC+ plans for a larger output hike next month, while data from the US and Asia showed signs of demand waning.

Brent crude futures for December delivery were down 56 cents, or 0.9%, to $65.47 a barrel at 1316 GMT. US West Texas Intermediate crude for November delivery was down 53 cents, also 0.9% lower, to $61.84 a barrel.

Both were trading at their lowest since early September, after settling more than 3% lower on Monday and losing another 1.5% on Tuesday.

Oil has dropped on market anticipation of a similar sized Opec+ production increase in November to the 500,000 barrels per day hike in September, and on US and Asian demand starting to fall, Rystad analyst Janiv Shah said.

“US drawdowns have slowed, so some bullish movement could start to flip,” he added.

The organisation of the Petroleum Exporting Countries and its allies, known as OPEC+, could agree to raise oil production by up to 500,000 bpd in November, triple the increase made for October, as Saudi Arabia seeks to reclaim market share, three sources familiar with the talks said.

However, OPEC wrote on X that media reports of plans to raise output by 500,000 bpd were misleading.

Meanwhile, in the United States, an industry report showed crude stockpiles fell while gasoline and distillate inventories rose in the week ended September 26, according to market sources citing American Petroleum Institute estimates on Tuesday.

Agencies