US stock futures fall as government shutdown risks delaying key economic data

By Niket Nishant and Sukriti Gupta

Wall Street futures slid on Wednesday after the deep partisan rift in Washington led to a federal government shutdown that risks delaying crucial economic data and could potentially muddy the Federal Reserve's policy-easing outlook.

The risk-off sentiment reflected investor unease over what analysts have warned could be a prolonged impasse.

Markets are leaning heavily into hopes of a dovish Fed policy to sustain the rally that led equities to their second straight quarter of gains on Tuesday.

"We would expect both the September employment report and next week's CPI release to be delayed until after the government re-opens," J.P.Morgan economists said in a note.

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 - but 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.

At 06:56 a.m. ET, Dow E-minis (YMcv1) were down 228 points, or 0.49%, S&P 500 E-minis ES1! were down 38.5 points, or 0.57%, and Nasdaq 100 E-minis NQ1! were down 165.25 points, or 0.66%.

The nonfarm payrolls report, scheduled for release on Friday, will now likely be delayed. That would be a setback for investors hoping for benign data to support a 25-basis-point Federal Reserve rate cut.

The ADP National Employment Report and the Institute for Supply Management's manufacturing PMI for September, slated for Wednesday, will likely be scrutinized for clues on the labor market as well as inflation whenever they are released.

The shutdown could also jolt the labor market if federal agencies resort to mass layoffs, as U.S. President Donald Trump has vowed to do.

"Headlines about potential permanent layoffs linked to the shutdown add a low-probability, high-impact tail risk that could nudge unemployment higher," said Daniela Hathorn, senior market analyst at online trading company Capital.com.

Additionally, investors will parse commentary from Federal Reserve Bank of Richmond President Thomas Barkin for any shift in tone as policymakers navigate an uncertain data landscape.

Nike NKE was among the early movers, rising 3.9% in premarket trading a day after reporting surprise revenue growth in the first quarter.

NYSE-listed shares of Lithium Americas LAC surged 31.4% after it said the U.S. Department of Energy had taken a 5% stake in the company.

AES AES rose 13.7% after the Financial Times reported on Tuesday that BlackRock-owned BLK Global Infrastructure Partners was nearing a $38-billion deal to acquire the utility group.

Marvell Technology MRVL slipped 2.8% after TD Cowen downgraded the stock to "hold" from "buy".

And GE Vernova GEV declined 1.9% after RBC Capital Markets downgraded the power-equipment maker's rating to "sector perform" from "outperform".