Dow, S&P 500, Nasdaq Open Down; Government Shutdown; Gold Price Rises; Bitcoin Climbs; Nike, Nvidia, Tesla, Strategy, and More Movers
Stocks fell on Wednesday after a U.S. government shutdown began overnight and ADP’s latest employment report showcased weakness in private sector hiring.
The Dow Jones Industrial Average fell 106 points, or 0.2%. The S&P 500 was down 0.4%. The Nasdaq Composite was down 0.5%.
The yield on the 2-year Treasury note dropped to 3.55%. The 10-year yield was down to 4.1%. Bond yields fell sharply after ADP said the U.S. lost 32,000 private sector jobs in September.
August’s job growth of 54,000 was revised to show a decline of 3,000 jobs in the wake of an annual preliminary benchmarking of its payroll data. That was based on the full-year 2024 results of the Bureau of Labor Statistics’ Quarterly Census of Employment and Wages.
“ADP was awful,” writes Andrew Brenner, head of international fixed income at NatAlliance Securities. “Between the revision to last month of 57,000, and the worse than expected 83,000 from expectation to actual for this month, we now have the first back to back negative ADP numbers since mid 2020.”
Odds of a quarter-point interest-rate cut later this month by the Federal Reserve were up to 99%, while odds of a half-point cut were at 1%, according to the CME FedWatch Tool. Odds of no cut were at 3.8% prior to the report. Traders see an 88.9% chance of a half-point in cuts through the end of the year, and a 10.2% chance of a just quarter-point cut this year. Odds of three-quarters of a point in cuts were up to 0.9% from zero.
Markets mostly ignored the looming government shutdown, but stocks were down after lawmakers failed to pass a temporary funding bill. Market commentators have pointed to strong historical S&P 500 trends during prior shutdowns.
The phrase “this time is different” is infamous on Wall Street as a sign of froth, but I believe “this time will be the same” could be just as dangerous for markets. Though the S&P 500 has averaged a gain during past government shutdowns, what if this time is different? With the major indexes still hovering near record levels, there’s not much room for error.
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