US stocks struggled on Wednesday after Washington entered its first government shutdown in seven years, raising concerns over the economic fallout just as a closely watched jobs report delivered a negative surprise. The Nasdaq Composite (IXIC) rose 0.3% in midday trading, while the S&P 500 (GSPC) edged up 0.1%. The Dow Jones Industrial Average (DJI) slipped slightly, down 0.05%.
The muted trading action follows the market’s strongest third quarter since 2020. However, optimism has quickly given way to unease, as Wall Street grapples with the shutdown’s potential hit to growth and uncertainty over incoming labor market data.
Market Movers:
- AES (AES) +37%: Shares soared after reports emerged that BlackRock-owned Global Infrastructure Partners is nearing a $38 billion takeover of the utility. The acquisition would be one of the largest infrastructure deals ever, boosting optimism about AES’s long-term growth prospects amid rising data center energy demand.
- Conagra Brands (CAG) +8%: Conagra jumped after the company posted better-than-expected quarterly results. While revenue and profit fell year over year, refrigerated and frozen foods saw renewed growth, and management reaffirmed 2026 guidance, easing investor concerns about inflationary pressures.
- Ford (F) +3%: Ford gained after reporting an 8.2% rise in US sales during the third quarter, led by strength in pickup trucks and record demand for its electric vehicles. EV sales jumped more than 30%, with the Mustang Mach-E and F-150 Lightning both hitting records.
- Meta (META) -2%: Meta extended its recent downturn as shares fell nearly 3% after news of its $14 billion AI deal with CoreWeave raised questions about its reliance on external chip supply. The company also revealed plans to serve ads based on AI chats starting in December.
- Reddit (RDDT) -17%: Shares plunged for a second day after data showed references to its content in ChatGPT responses had collapsed. The decline raises questions about Reddit’s ability to monetize its data licensing business in the face of weakening AI integration.
Shutdown Hits at a Delicate Economic Moment
The government shutdown is already forcing hundreds of thousands of federal employees off the job and halting critical agency functions. The Bureau of Labor Statistics confirmed it will “completely cease operations” during the shutdown, putting Friday’s nonfarm payrolls report in doubt. The timing is especially precarious given heightened scrutiny on labor data as the Federal Reserve weighs the path of interest rates.
Analysts warn that the longer the shutdown drags on, the larger the hit to US GDP. Beyond lost productivity, ripple effects could spread to private companies that rely on federal contracts and consumer demand in regions with high concentrations of government workers.
Jobs Data Fuels Rate Cut Bets
ADP’s September payrolls report showed a surprise dip of 32,000 private-sector jobs, compared with expectations for a 51,000 gain. The weak reading gave investors more confidence that the Fed will cut interest rates at its October meeting, with futures markets now pricing in a 100% probability of a reduction. Treasury yields fell in response, with the 10-year dropping nearly four basis points to 4.11% before rebounding slightly. The sharp move into safe-haven assets underscores market unease about the combined drag of weaker jobs and a prolonged shutdown.
Corporate Headlines Drive Sector Swings
Earnings and deal activity added to the day’s volatility. Conagra’s better-than-expected results boosted packaged food stocks, while AES’s rally helped lift the utilities sector. In contrast, Big Tech traded mixed, with Meta and Alphabet lower, while Tesla climbed after Elon Musk publicly criticized Netflix, and shares of the EV maker rose over 3%. Healthcare also led gains in the S&P 500 after Eli Lilly surged on optimism that Pfizer’s recent deal with the Trump administration could open the door for more partnerships across the industry.
Looking Ahead
Markets enter October balancing optimism over potential Fed easing with the risks of prolonged political gridlock. The government shutdown has already disrupted federal operations and is likely to delay critical data such as the September jobs report, leaving investors and policymakers with fewer signals to gauge the economy’s true health.
Meanwhile, fresh tariffs, corporate earnings, and a weakening labor market will keep volatility elevated. Traders are betting heavily on an October rate cut, but without reliable data, the Fed may hesitate — making the path forward for stocks uncertain in the weeks ahead.