Nasdaq 100 and S&P500 Drop as Payroll Miss and Government Shutdown Trigger Risk-Off

Government Shutdown Raises Market Risks

U.S. stock index futures fell sharply Wednesday as traders absorbed the twin headwinds of a surprise drop in private payrolls and the federal government shutdown that began at midnight.

Dow futures slid 157 points, or 0.3%, while S&P 500 and Nasdaq 100 futures lost 0.4% and 0.5%, respectively. The selling follows a strong September for equities, with the S&P 500 up more than 3.5%, but the deteriorating macro picture has sparked a risk-off tone.

ADP Payrolls Miss Deepens Labor Concerns

ADP reported a 32,000 job loss in September, far worse than the consensus forecast for a 45,000 gain. It was the largest monthly decline since March 2023, and the August figure was revised lower to a loss of 3,000. With the Bureau of Labor Statistics’ nonfarm payrolls report delayed due to the shutdown, traders are treating the ADP data as a primary indicator of labor market health. The decline signals softening hiring momentum and boosts the probability of a near-term Fed rate cut.

Fed Left Without Key Data Ahead of October Meeting

The government closure suspends most Labor Department operations, including the release of September’s official employment report. This leaves the Federal Reserve with limited visibility heading into its October 28–29 policy meeting. While the market has priced in a second rate cut, the lack of fresh economic data could complicate decision-making. Nonetheless, the weak ADP print strengthens the case for easing, especially as inflation risks remain elevated and growth shows signs of slowing.

Bank and Tech Stocks Lead Declines, Gold Breaks Out

Bank stocks fell in early trade, with Citigroup and Wells Fargo both down nearly 1%, while JPMorgan Chase, Goldman Sachs, and Morgan Stanley also declined.

Tech leaders Palantir and Oracle were lower, reflecting broad-based selling.

Meanwhile, gold hit a record high as traders sought safety, and 10-year Treasury yields pulled back. Bitcoin also gained modestly. The U.S. Dollar Index weakened following the ADP miss.

Market Forecast: Bearish Near Term Bias for Risk Assets

The combination of a deteriorating labor market, suspended economic data, and heightened political uncertainty creates a bearish short-term outlook for risk assets.

Traders should expect further pressure on yields and stock index futures, while gold and other defensive assets may remain supported.

Unless political resolution is swift or Fed communication turns overtly dovish, equities appear vulnerable to continued downside.

More Information in our Economic Calendar.