US stock futures are pointing lower at the start of the new quarter, though they have recovered more than a third of their overnight losses as the first US government shutdown in nearly seven years gets underway. The initial shutdown during Trump’s first term lasted three days, while the second stretched to 35 days—raising the question of how long this one might persist.As of 8:00 a.m. ET, S&P 500 futures are down 0.4%, off their session lows, while Nasdaq futures fall 0.5%. Gold futures are up nearly 1%, continuing their march toward the $4,000 level. Pre-market action reflects a clear risk-off tone across US assets, including a softer dollar, which is supporting international equities. Europe’s Euro Stoxx 50 hit a new intraday all-time high, led by healthcare and communications stocks.The Magnificent Seven are broadly weaker, with semiconductor names also under pressure. Nike stands out, rising 3% after reporting stronger-than-expected earnings. The Treasury yield curve is steepening in a twist move. Commodities are mostly lower, excluding precious metals, where silver is outperforming gold.With Friday’s nonfarm payrolls report almost certain to be delayed due to the shutdown, today’s ADP employment report takes on added significance. Investors will also monitor ISM manufacturing, construction spending, vehicle sales, and mortgage applications.
In premarket trading, all Magnificent Seven stocks are in the red (Apple -0.3%, Amazon -0.7%, Tesla -0.3%, Nvidia -0.5%, Alphabet -0.7%, Meta -0.7%, Microsoft -0.7%).Notable movers include:- AES Corp. (+14%) amid reports that BlackRock’s Global Infrastructure Partners is in advanced talks to acquire the utility.- Corteva (+1%) after announcing plans to split into two standalone companies focused on crop protection and seeds.- Lithium Americas (+32%) after Energy Secretary Chris Wright said the US government would take a stake in the company.- Marvell Technology (-2.5%) after TD Cowen downgraded the stock to hold.- Nike (+3%) following a revenue beat in its first quarter.- Sunrun (+5%) after Jefferies upgraded the stock to buy.- Veeco Instruments (+4%) on plans to merge with Axcelis, which fell 1.7%.Apple stated it did nothing improper in choosing OpenAI over Elon Musk’s xAI for generative AI integration in its iOS platform. Goldman Sachs is reportedly among financial firms considering opening offices in Kuwait.The shutdown began after a midnight funding deadline passed without agreement, following clashes between President Trump and Congressional Democrats over healthcare spending. Traders worry that the absence of key economic reports will obscure the outlook for monetary policy.Fiona Boal of S&P Dow Jones Indices said investor focus will center on the shutdown’s duration, disruptions to economic data, and possible federal job cuts.
The Congressional Budget Office estimates that roughly 750,000 federal workers will be furloughed, costing $400 million per day in lost wages. Additional layoffs proposed by the Trump administration could further pressure jobless claims at a time when labor market conditions are already softening.Historically, government shutdowns have not significantly moved markets, but timing matters. With the Fed heavily data-dependent, the absence of reliable economic releases could heighten volatility. Policymakers face a murky picture, with inflation still above target and the labor market gradually weakening.Money markets currently price in a 90% probability of a quarter-point rate cut this month and nearly a 70% chance of another by year-end. Fed officials, including Logan, have urged caution, noting inflation remains elevated and financial conditions have eased.Outside the US, European equities gained 0.4%, supported by pharmaceutical stocks after Pfizer reached a drug-pricing agreement with the White House. Major movers included Greggs (+13%), Ambu (+11%), Arcadis (+9%), and Soitec (+7.7%), while Tate & Lyle fell sharply.Asian markets were mixed. Gains in South Korea, India, and Taiwan offset declines in Japan, where concerns about the shutdown’s spillover effects weighed. Hong Kong and mainland China were closed for holidays.In currency markets, the Bloomberg Dollar Spot Index fell 0.1%, marking a fourth consecutive daily decline. The yen outperformed, benefiting from safe-haven demand, while the Swiss franc lagged.Treasuries were mixed, with the curve steepening as front-end yields edged lower and longer maturities rose slightly. The 10-year yield hovered near 4.13%. German bund yields climbed three basis points.Oil prices extended losses, with Brent slipping below $66 per barrel and WTI under $62. Gold gained $34, nearing $3,900 per ounce.Key US economic releases today include ADP employment data, final S&P Global manufacturing PMI, ISM manufacturing, and construction spending. Fed speakers Barkin and Goolsbee are also scheduled.Despite shutdown concerns, equity positioning remains slightly above neutral, suggesting room for additional buying, especially given historically strong fourth-quarter seasonality. Meanwhile, the AI investment theme remains robust, with estimates suggesting $7 trillion may be needed to fund rapid expansion in the sector.For now, markets are balancing shutdown uncertainty, shifting rate expectations, and persistent enthusiasm around artificial intelligence as Q4 begins under a cloud of fiscal and political tension.