U.S. stock index futures were pointing to a weaker start on Wednesday, with markets bracing for a potential pullback following a string of recent gains.
The shift in sentiment came after the federal government entered a shutdown early this morning, as lawmakers once again failed to agree on a short-term funding measure.
The standoff stems from partisan divisions, with Democrats insisting that an extension of expanded Obamacare tax credits be included in any stop-gap deal, while Republicans maintain that the issue should be addressed only after a funding package is passed.
Shutdown clouds outlook
Beyond the political wrangling, investors are increasingly worried about the economic fallout of a prolonged shutdown. The biggest concern is not only the disruption itself, but also the likelihood of delays in key economic data releases.
The Labor Department’s September employment report, originally set for release on Friday, is now expected to be postponed. Traders fear the absence of timely jobs and inflation data could complicate the Federal Reserve’s next policy decision.
With official data at risk, the Fed may have to lean more heavily on private-sector indicators. On Wednesday, payroll processor ADP reported that private employment unexpectedly fell by 32,000 in September, following a revised 3,000 decline in August. Economists had forecast a gain of 50,000 jobs, after the initially reported 54,000 increase the prior month.
Markets recap
On Tuesday, Wall Street saw choppy action for most of the day as investors monitored the budget drama in Washington. The major averages swung around the flatline before staging a late rally that carried them into positive territory.
The S&P 500 added 27.25 points, or 0.4%, to finish at 6,688.46. The Nasdaq climbed 68.86 points, or 0.3%, closing at 22,660.01. The Dow advanced 81.82 points, or 0.2%, to settle at 46,397.89.
Analysts suggested the late strength may have reflected optimism that lawmakers could still reach a last-minute compromise—or at least confidence that any shutdown would have limited long-term economic damage.
Data and sector moves
Markets largely brushed off a Conference Board survey showing U.S. consumer confidence fell more than anticipated in September. The index dropped to 94.2 from an upwardly revised 97.8 in August, missing expectations for 96.0 and hitting its lowest reading since April 2025.
Meanwhile, sector performance was mixed. Pharmaceutical names led the way higher, with the NYSE Arca Pharmaceutical Index jumping 3.7% to a six-month high. Pfizer (NYSE:PFE) surged 6.8% after announcing a deal with the Trump administration aimed at reducing drug costs for U.S. patients.
Healthcare stocks broadly gained, lifting the Dow Jones U.S. Health Care Index by 2.4%. Biotechnology, hardware, and networking shares also advanced, while weakness persisted in banking and energy stocks.
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