TLDR
- Dow, S&P 500, and Nasdaq 100 futures all dropped 0.2% in premarket trading Tuesday morning
- Congress must pass funding by midnight Wednesday to prevent first government shutdown since 2019
- Government shutdown would halt jobs report release and other economic data from Bureau of Labor Statistics
- Trump imposed 10% tariffs on lumber imports and 25% on certain wood furniture Monday evening
- Federal Reserve’s October meeting could proceed without current labor market data if shutdown continues
Stock market futures fell across all major indexes Tuesday as investors monitored two developing situations in Washington. The Dow Jones Industrial Average futures declined 80 points or 0.2% before markets opened. S&P 500 futures and Nasdaq 100 contracts both slipped 0.2%.
Congressional leaders face a 12:01 a.m. Wednesday deadline to pass a short-term funding measure. Failure to reach agreement would trigger the first government shutdown since 2019. Trump met with Republicans and Democrats Monday in the Oval Office but no deal was reached.
Vice President JD Vance told reporters he expects a shutdown to happen. The stalemate leaves little time for lawmakers to find common ground before the deadline expires.
Economic Data at Risk
A government shutdown carries direct consequences for market participants. The Bureau of Labor Statistics will completely cease operations if funding lapses. This means Friday’s nonfarm payrolls report would be delayed.
The September jobs report holds particular importance for Federal Reserve policy decisions. Labor market health has become a central focus for policymakers after recent mixed economic signals. Some Fed officials have expressed differing views on the path for interest rate cuts.
Deutsche Bank analyst Jim Reid pointed out the timing concerns. The Fed’s next policy meeting is scheduled for October 28-29. A shutdown lasting more than a few days could leave the central bank without current economic data. Historical records show the median government shutdown lasts two to three days.
Tuesday’s JOLTS report on job openings may provide the last labor market insight from BLS for some time. Consumer confidence data is also scheduled for release Tuesday.
Trump Announces New Tariffs
President Trump announced fresh tariffs Monday evening. The new duties include a 10% rate on lumber and timber imports. Certain wood-based furniture faces initial levies of 25%.
The tariff rates came in lower than Trump had threatened last week. The announcement follows previous tariff measures on foreign-made movies and 100% duties on branded pharmaceutical imports.
Gold futures climbed 0.7% to $3,883 an ounce in early trading. The precious metal touched $3,899 an ounce before pulling back. The dollar fell 0.2% against a basket of major currencies.
The benchmark 10-year U.S. Treasury yield dropped 1 basis point to 4.13%. Bitcoin prices rose during the premarket session.
Trump also released a 20-point plan Monday aimed at resolving the Gaza conflict. The president stated Israel would receive his full support if Hamas rejects the proposal.
Market participants are weighing how the combination of potential data blackouts and new trade policies might affect near-term volatility. Wall Street closed Monday with modest gains before futures turned lower overnight.
