The S&P 500 fell on Thursday after giving up early gains, as investors weighed the ongoing U.S. government shutdown and U.S.-China trade tensions against a busy week of corporate earnings reports.
By 2:54 p.m. ET (19:54 GMT), the Dow Jones Industrial Average was down 269 points (0.6%), while the S&P 500 slipped 0.7% and the NASDAQ Composite declined 0.6%.
🇺🇸 Government Shutdown and Trade Concerns Pressure Markets
A Senate vote to extend funding and end the government shutdown failed on Wednesday, fueling worries that the economic impact could worsen if the standoff continues.
According to Morgan Stanley, the current shutdown could prove “more consequential than previous instances” due to the risk of permanent layoffs among federal workers and delayed economic data releases.
Adding to market anxiety, trade tensions between Washington and Beijing continue to escalate. Treasury Secretary Scott Bessent told CNBC that the Trump administration is unlikely to ease its tough trade stance, even if markets react negatively.
President Donald Trump also suggested cutting off certain trade ties with China, accusing Beijing of “purposefully not buying” U.S. soybeans and other agricultural products.
đź’Ľ Earnings Season in Focus
In corporate news, United Airlines (NASDAQ: UAL) shares dipped despite posting strong third-quarter results and forecasting record revenue for the current quarter.
Meanwhile, Salesforce (NYSE: CRM) stock jumped after raising its long-term revenue forecast to over $60 billion by 2030 and announcing a $7 billion share buyback.
Oracle (NYSE: ORCL) is also holding a meeting with financial analysts during its AI-focused conference in Las Vegas, where executives are expected to discuss growth plans for its cloud division.
Elsewhere, Taiwan Semiconductor Manufacturing Co. (TSMC) reported record quarterly profits, driven by soaring global demand for AI infrastructure chips.
đź’° Fed Outlook and Economic Data
Federal Reserve Governor Christopher Waller reiterated on Thursday that he supports another interest rate cut at the central bank’s October 29 meeting, citing mixed signals from the labor market.
“Based on all the data we have on the labor market, I believe the Fed should reduce the policy rate another 25 basis points,” Waller said in remarks prepared for a Council on Foreign Relations event in New York.
Economic data released earlier in the day showed a sharp downturn in U.S. factory activity. The Philadelphia Federal Reserve reported that its business activity index fell to -12.8 in October from 23.2 in September, signaling a contraction in manufacturing across eastern Pennsylvania, southern New Jersey, and Delaware.
