U.S. stock futures are signaling a modestly lower open on Tuesday, suggesting that equities could pull back after two sessions of mostly gains.
Investors may seek to take profits following recent market strength as attention turns to the looming risk of a government shutdown. Lawmakers face a deadline of 12:01 a.m. ET on Wednesday to pass funding legislation, or federal operations could come to a halt.
Democrats are pushing for a temporary funding bill to extend enhanced Obamacare tax credits, while Republicans argue that such measures should be debated only after the bill is passed.
After Monday’s meeting between President Donald Trump and Congressional leaders, Vice President JD Vance said he believes “we’re headed to a shutdown because the Democrats won’t do the right thing.”
“Relations between the Democrats and Republicans are frostier than an Alaska morning, so markets are not confident on the prospects of agreeing a deal before midnight tonight,” said Russ Mould, investment director at AJ Bell.
He added, “One of the biggest short-term concerns for markets is the impact this would have on the release of government data – particularly the jobs number due on Friday – without which the Federal Reserve might not feel as confident about cutting interest rates.”
Despite the looming risk, any market pullback may be limited, as lawmakers frequently strike last-minute deals to avoid a shutdown.
Monday’s trading session saw most indexes move higher, building on Friday’s gains. While all major averages posted positive results, buying activity was somewhat subdued. The Nasdaq advanced 107.09 points, or 0.5 percent, to 22,591.15; the S&P 500 rose 17.51 points, or 0.3 percent, to 6,661.21; and the Dow inched up 68.78 points, or 0.2 percent, to 46,316.07.
Tech stocks helped fuel Wall Street’s gains, led by AI powerhouse Nvidia (NASDAQ:NVDA), which climbed 2.1 percent. Video game developer Electronic Arts (NASDAQ:EA) also jumped 4.5 percent after announcing it would be acquired by a consortium including PIF, Silver Lake, and Affinity Partners in an all-cash deal valued at roughly $55 billion. Under the terms of the agreement, EA shareholders will receive $210 per share in cash, a 25 percent premium over the stock’s unaffected closing price of $168.32 on Thursday, September 25.
Still, traders remained cautious, hesitant to make larger moves as the risk of a U.S. government shutdown looms. Attention also turns to Friday’s Labor Department jobs report, expected to show a 50,000 increase in employment for September. The data release could be delayed if the government shuts down, potentially affecting interest rate expectations.
Computer hardware stocks stood out with strong gains, as the NYSE Arca Computer Hardware Index jumped 4.1 percent. Western Digital (NASDAQ:WDC) led the sector, soaring 9.2 percent after Morgan Stanley nearly doubled its price target for the company.
Brokerage stocks also showed strength, reflected in a 1.4 percent rise in the NYSE Arca Broker/Dealer Index.
Meanwhile, energy stocks fell sharply on plunging crude oil prices, dragging the NYSE Arca Oil Index down 2.3 percent and the Philadelphia Oil Service Index down 1.7 percent.
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