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postUS 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.
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Premarket trending tickers: AES, Wolfspeed and Sunrun
Here’s a look at some of the top stocks trending in premarket trading:
AES (AES) stock jumped 13% before the bell after the Financial Times reported that BlackRock (BLK)-owned Global Infrastructure Partners is nearing a $38 billion deal to buy utility group AES in what would be one of the largest infrastructure takeovers of all time.
Wolfspeed (WOLF) rose 3% before the bell after soaring 50% the day prior following the news the chipmaker had exited Chapter 11 bankruptcy with significantly less debt on its balance sheet.
Sunrun (RUN) stock rose 4% in premarket trading on Wednesday. The group recently announced the launch of its first vehicle-to- grid power plant.
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Lithium Americas stock surges after US government takes equity stake
Shares in Lithium Americas (LAC, LAC.TO) shot up over 30% on Wall Street early Wednesday after the US Department of Energy snapped up a 5% stake in the Canadian miner.
Lithium Americas said the DOE has also taken a separate 5% stake in the Thacker Pass lithium project in Nevada, a joint venture between the Vancouver-based company and General Motors (GM),
Reuters reports:
GM, which invested $625 million in the mine last year for a 38% stake, has the right to buy all of the project’s lithium from its first phase and a portion from the second phase for 20 years.
Read more here.
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US government shutdown begins after talks break down
Yahoo Finance’s Ben Werschkul takes a look at the potential economic impact of the funding stoppage that started early Wednesday:
Federal agencies will now implement their contingency plans and send hundreds of thousands of government workers home to wait out a stalemate.
Economic effects might be noticeable quickly as government spending largely ceases and economic data gets delayed, starting this Friday with what was scheduled to be a jobs report from the Bureau of Labor Statistics. These impacts could be mitigated if the stoppage ends promptly.
Trump on Tuesday also promised to heighten the potential effects of a shutdown — in part to pressure Democrats — saying “we can do things during the shutdown that are irreversible.”
He added later in the day “a lot of good can come down from shutdowns. We can get rid of a lot of things that we didn’t want.”
The shutdown is also not the only Washington policy focus for investors Wednesday. Markets will also be digesting new tariffs, as promised duties of 100% on a slice of pharmaceutical products and 25% duties on heavy-duty trucks are scheduled to go into effect.
This week also marked the last formal day on the job for government employees who accepted a Department of Government Efficiency program earlier this year called “fork in the road” that induced tens of thousands to leave government service.
Read more here.
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Nike stock pops as sales, earnings beat amid tariff headwinds
Nike’s (NKE) fiscal first quarter earnings and sales topped Wall Street estimates late on Tuesday.
The stock rose about 3% in premarket trading as investors welcomed the performance from the sneaker giant, which is navigating a major turnaround strategy under CEO Elliott Hill and President Trump’s tariffs.
Yahoo Finance’s Brooke DiPalma reports:
Read more here.
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Gold reaches new record price as government shutdown drives investors to secure assets
Bloomberg reports:
Read more here.
