Wall Street futures fell and gold surged to fresh highs on Wednesday as the United States entered a government shutdown, halting critical economic data releases and clouding the outlook for Federal Reserve policy.
The shutdown, which has no clear resolution in sight, will suspend the September employment report and furlough roughly 750,000 federal workers at a daily cost of about $400 million.
S&P 500 and Nasdaq futures each dropped 0.5%, while gold climbed to a record $3,875 an ounce, extending its rally for a third consecutive session. European market futures remained largely unchanged.
With Friday’s non-farm payrolls report off the calendar, investors are expected to place more weight on the ADP National Employment Report due later in the day, which is forecast to show a modest increase of 50,000 private-sector jobs.
“Typically, shutdowns have little direct impact on markets. In fact, the 2018–2019 closure coincided with a Wall Street rally,” said Kyle Rodda, senior analyst at Capital.com. “But this time, markets face two risks: delayed data and President Trump’s warning of possible permanent layoffs, which could turn the shutdown into a mini labor market shock.”
Rate expectations shifted further in response to the turmoil, with futures now implying a 96% chance of an October Fed rate cut, up from 90% a day earlier. Markets are also pricing in a 74% probability of another reduction in December.
Anthony Saglimbene, chief market strategist at Ameriprise, warned that a prolonged shutdown could undermine inflation reporting and broader data quality. “If the Bureau of Labor Statistics remains hobbled, collection efforts for other reports may suffer as well,” he said.
In Asia, Japan’s Nikkei slid more than 1% after an 11% rally in the prior quarter, while South Korea’s Kospi added 0.6% on strong export growth. Taiwan’s benchmark rose 1.3% after officials rejected U.S. calls for half of its semiconductor production to be relocated. Chinese markets, including Hong Kong, were shut for a holiday.
Elsewhere, the dollar index steadied at 97.84 after three days of declines, with little reaction to a Bank of Japan survey showing firms expect inflation to remain above target. U.S. Treasury yields were stable, with the benchmark 10-year note unchanged at 4.156%.
Oil prices were flat after two days of losses, with U.S. crude inching up 0.1% to $62.46 a barrel and Brent gaining 0.2% to $66.16.
