US Government shutdown: Wall Street falls as shutdown risks data delays

The main US stock indexes have declined 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.”

In early trading on Wednesday, the Dow Jones Industrial Average fell 62.56 points, or 0.14 per cent, to 46,335.33, the S&P 500 lost 21.64 points, or 0.32 per cent, to 6,666.82, and the Nasdaq Composite shed 93.94 points, or 0.41 per cent, to 22,565.63.

Communication services shares on the S&P 500 fell 1.5 per cent, dragged by losses in Meta Platforms and Alphabet which shed 2.8 per cent and 1.1 per cent respectively.

The stocks also weighed on the Nasdaq.

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

The healthcare sector hit a more than five-month high and was last up 1.4 per cent.

Moderna and Regeneron both rose more than 6.3 per cent and were among the top performers on the benchmark index.

Adding to the uncertainty was the deep partisan rift in Washington DC 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 non-farm 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 per cent a day after reporting surprise revenue growth in the first quarter.

AES gained 13.3 per cent, topping the S&P 500 after the Financial Times reported on Tuesday that BlackRock-owned Global Infrastructure Partners was nearing a $US38-billion ($A57 billion) deal to acquire the utility group.

GE Vernova declined 2.1 per cent 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 per cent, 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.