US stocks edged lower on Tuesday as investors weighed the prospect of a federal government shutdown against an otherwise strong September for equities.
The Dow Jones Industrial Average hovered just below the flatline, while the S&P 500 and the Nasdaq Composite each slipped 0.1%.
Shutdown risks have added to broader concerns about a slowing labour market, the threat of stagflation, and elevated stock valuations.
Analysts noted that while shutdowns typically have a limited market impact, the current backdrop could make the situation more consequential.
The Labor Department said on Monday that the September nonfarm payrolls report, due Friday, will not be released if government operations are suspended.
Other economic data, including weekly jobless claims, would also be delayed, depriving investors and policymakers of key insights ahead of the Federal Reserve’s October meeting.
President Donald Trump further stoked concerns by warning over the weekend that a shutdown could trigger mass firings of federal workers.
Despite Tuesday’s dip, Wall Street is poised to close out September with unusually strong gains.
The S&P 500, which has fallen by an average of 4.2% in September over the past five years, has risen 3% this month.
The Dow is up 1.7%, while the Nasdaq has advanced about 4.9%.
The session also marks the end of the third quarter.
The S&P 500 has gained 7.2% since July, the Nasdaq is up nearly 11%, and the Dow has added 5%—on track for its fifth consecutive positive quarter.
The government shutdown
Democrats and Republicans have until midnight to reach a funding agreement and avoid a federal government shutdown, but prospects remain bleak.
Following a meeting between President Donald Trump and congressional leaders, Vice President JD Vance warned the US is “headed to a shutdown,” dimming hopes for an eleventh-hour deal.
A shutdown could disrupt the release of key economic data closely watched by investors, economists, and policymakers.
The Labor Department said it would not issue Friday’s nonfarm payroll report, Thursday’s weekly jobless claims, or other scheduled data if the government closes.
Data collection activities would also be suspended, potentially delaying future releases.
The absence of these indicators could complicate the Federal Reserve’s policy decisions, as officials have increasingly emphasised the health of the labour market in setting monetary policy.
Boston Federal Reserve President Susan Collins on Tuesday backed the central bank’s recent interest rate cut but signalled caution about the path ahead, citing persistent risks from inflation and a cooling labour market.
Speaking in New York, Collins said the decision to ease policy was warranted by the shifting balance of risks to the Fed’s dual mandate.
“In my view, a bit of easing was appropriate to address the recent shift in the balance of risks to our inflation and employment mandate,” she said in prepared remarks.
At the same time, Collins emphasised that policy must remain somewhat restrictive to ensure inflation continues to move lower.
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