US stocks experienced a modest increase on Wednesday, defying the economic uncertainty following the initiation of the government’s first shutdown in seven years, which potentially jeopardizes hundreds of thousands of jobs and billions in economic output. This positive momentum in the market coincided with the release of ADP’s employment report, which unexpectedly indicated a decline in private payrolls for September.
The S&P 500 saw a gain of 0.4%, and the tech-focused Nasdaq Composite rose by 0.5%, recovering from an initially sluggish session. The Dow Jones Industrial Average recorded a smaller increase of 0.2%. These gains come on the heels of a strong performance in the third quarter, marking the best quarter for stocks since 2020.
Despite concerns surrounding the shutdown, Wall Street appeared to absorb the immediate implications, with many investors focusing instead on the findings from the ADP report that showed an unexpected loss of 32,000 jobs in the private sector, falling significantly short of anticipations for a gain of 50,000 jobs. This disappointing data has intensified speculation regarding interest rate cuts by the Federal Reserve, with nearly all bets (99%) now favoring a cut later this month, and about 87% of investors expecting a reduction in December as well.
In Washington, the government shutdown has forced agencies to activate contingency plans, sending numerous federal employees home. President Trump issued warnings about imminent layoffs. Key government functions, such as those of the Bureau of Labor Statistics (BLS), will be suspended. The BLS was scheduled to release the critical September jobs report on Friday, but this will likely be delayed due to the shutdown, raising concerns about the implications for Federal Reserve policy decisions.
The government shutdown coincides with further policy moves from the Trump administration, including the implementation of substantial tariffs on various pharmaceutical products and heavy-duty trucks.
In the commodities market, gold futures surged to record highs above $3,900 per troy ounce as investors sought refuge in safe-haven assets amidst the uncertain economic landscape. Silver also gained ground, continuing its performance from the previous quarter.
In stock news, Intel shares saw a 6% increase following reports of potential negotiations with AMD for foundry services. Meanwhile, Bitcoin climbed over 3%, briefly surpassing $118,000, as investors anticipated a favorable “Uptober” for the cryptocurrency amidst market volatility.
Conagra Brands’ stock gained 3% after the company reported earnings slightly above analysts’ forecasts, buoyed by its refrigerated and frozen product lines despite lower overall revenue and profit compared to the previous year. The company continues to face inflationary pressures and shifting consumer behaviors.
Elsewhere, Ford reported a sales increase of 8.2% in Q3, largely driven by trucks and electric vehicles, boosting its stock modestly. Conversely, Reddit’s stock saw declines after data revealed a significant drop in citations of its content in ChatGPT responses, while AES Corporation shares soared 15% amid reports of a potential $38 billion acquisition by a BlackRock affiliate.
As the day unfolded, Treasury yields experienced a decline as investors sought the safety of US bonds, reflecting the rising uncertainty brought about by the government shutdown and the delayed release of critical economic data.
Overall, the interplay of the government shutdown and disappointing employment figures has left investors vigilant, as the market navigates through an increasingly complex economic landscape.
