U.S. stock indexes slipped on Wednesday as investors reacted to weak private payrolls data and concerns over a federal government shutdown. The uncertainty raised fresh questions about the Federal Reserve’s next policy move.
The ADP National Employment Report showed private payrolls dropped the most in two-and-a-half years during September. This fueled market bets that the Fed will cut interest rates by 25 basis points at its next meeting. Traders are closely watching the labor market, which must remain soft enough to justify rate cuts but not weak enough to spark fears of a deeper economic slowdown.
Jamie Cox, managing partner at Harris Financial Group, noted that ADP may now be a more accurate reflection of the true employment picture. He also pointed to the Trump administration’s efforts to shift job growth toward the private sector.
By mid-morning trading, the Dow Jones Industrial Average was down 62 points, or 0.14%, at 46,335. The S&P 500 lost 21 points, or 0.32%, at 6,666, while the Nasdaq Composite dropped 93 points, or 0.41%, to 22,565.
Communication services led declines on the S&P 500, with Meta Platforms down 2.8% and Alphabet falling 1.1%. Technology stocks also weakened, with Nvidia losing 0.9%. In contrast, healthcare stocks outperformed, reaching a five-month high. Moderna and Regeneron surged more than 6%.
Government Shutdown Worries
The market also faced pressure from Washington’s budget standoff, which triggered a federal government shutdown. Historically, shutdowns have not derailed markets, with the S&P 500 rising during the last six, according to Deutsche Bank. However, this shutdown comes at a time of elevated valuations and investor caution.
Prolonged shutdowns pose additional risks. Vanguard data shows that in seven shutdowns lasting over 10 days, the S&P 500 fell in four cases and rose in three. The nonfarm payrolls report, due Friday, is now likely to be delayed.
Other data showed that U.S. manufacturing edged closer to recovery in September, though new orders and employment remained weak. Investors are also awaiting remarks from Richmond Fed President Thomas Barkin.
Corporate Movers
Nike gained 3.4% after reporting stronger-than-expected first-quarter revenue. Utility firm AES surged 13.3% after reports of a potential $38 billion acquisition by BlackRock-owned Global Infrastructure Partners.
On the downside, GE Vernova slipped 2.1% after RBC downgraded the stock. Corteva fell 7.2% after announcing plans to split its seed and pesticide units into separate publicly traded companies.
Market breadth was positive, with advancers outnumbering decliners on both the NYSE and Nasdaq. The S&P 500 posted 17 new 52-week highs, while the Nasdaq registered 57.
