Nasdaq: Fed Data Blackout and Shutdown Threat Fuel Stock Market Volatility

Nasdaq and S&P 500 Edge Lower as Government Shutdown Risk Clouds Market Sentiment

The Nasdaq and S&P 500 is under pressure shortly before the mid-session on Tuesday as traders eyed the rising odds of a U.S. government shutdown, which added to concerns around weakening consumer sentiment and delayed economic data.

The benchmark index fell 0.2%, the Dow lost 168 points, or 0.4%, and the Nasdaq eased 0.1%. Despite the dip, all three major indexes remain on track for strong September gains, a rare feat during what’s typically a challenging month for equities.

Investor caution rose following remarks from House Speaker Mike Johnson, who expressed doubt about a shutdown deal before the looming deadline. The impasse raises fears that key economic releases—including the pivotal September jobs report—could be delayed, potentially leaving the Federal Reserve without fresh labor market data ahead of its next policy decision.

How Could the Shutdown Delay Key Federal Reserve Data?

The Labor Department has already confirmed the nonfarm payrolls report won’t be released if the government shuts down. That would deprive the Fed of critical insight into employment conditions, at a time when policymakers are watching for signs of labor market cooling and inflation stickiness.

Consumer confidence also missed expectations, with the Conference Board’s index falling to 94.2—its lowest since April. The “present situation” sub-index touched a one-year low, underlining a fragile consumer outlook that could feed into slower economic growth. As data disruptions loom, strategists warn of a possible uptick in market volatility.

Which Sectors and Stocks Are Feeling the Heat—or Finding Relief?

Energy and financials led the losers, falling 1.55% and 1.01% respectively. Communication services and consumer discretionary sectors also underperformed.

In contrast, healthcare climbed 0.71%, with Merck and Pfizer up over 2% following news that Pfizer struck a pricing deal with the White House. Nvidia gained 2.5% after CoreWeave, which it backs, secured a $14.2 billion cloud infrastructure contract with Meta.

Top decliners included Albemarle (-7.6%), Capital One (-5.4%), and Paycom (-4.8%). On the upside, Lamb Weston surged over 5%, and Interpublic Group gained more than 4%.

Despite Shutdown Fears, Will September Close in the Green?

Historically weak in September, the S&P 500 is now up 3% for the month, while the Nasdaq has climbed 5%, and the Dow is higher by 1%. For the quarter, the S&P is tracking a 7% gain, with the Nasdaq up 10% and the Dow on pace for its fifth straight positive quarter.

Market Outlook: What’s Next for Traders?

A protracted shutdown could alter the tone on Wall Street, especially if it delays key inflation and labor data. While most traders expect a resolution within two weeks, uncertainty alone could weigh on sentiment.

With Fed policy increasingly data-dependent, any blackout in economic releases may reduce market conviction and fuel near-term volatility.

Traders should monitor developments from Washington closely, along with scheduled remarks from Fed officials for clues on the path ahead.

More Information in our Economic Calendar.