S&P500: US Stocks Push Higher as Traders Price In Fed Cuts & Shutdown Impact

S&P 500 Notches New High as Traders Bet on Brief Government Shutdown

The S&P 500 edged up 0.2% on Wednesday, marking a new intraday all-time high above the 6,700 level, as traders shrugged off a U.S. government shutdown. The Nasdaq Composite advanced 0.4%, while the Dow hovered near flat. Earlier in the day, the S&P 500 dipped as much as 0.5%, but buyers returned on expectations that the shutdown would be short-lived and minimally disruptive to the broader economy.

Optimism around a limited impact helped offset initial caution stemming from a failed attempt by the Senate to pass a temporary spending bill. The shutdown, which furloughed approximately 750,000 federal workers, is not yet seen as a significant drag on markets. However, concerns remain over delayed economic data and broader risks tied to labor market weakness and stretched valuations.

How Is the Federal Reserve’s Path Affected by the Shutdown?

With the Labor Department confirming a halt to most operations, the market is unlikely to receive the September nonfarm payrolls report, a critical data point ahead of the late October Fed meeting.

Private payrolls data from ADP showed a decline of 32,000 jobs, well below the expected 45,000 gain—adding weight to calls for a Fed rate cut. With limited fresh data expected, traders are betting that the central bank will proceed with its anticipated second rate cut of the year later this month.

This makes the ADP report more important than usual. It also adds volatility potential, with the Fed effectively flying blind in the near term as it evaluates employment and inflation trends without key government reports.

Which Sectors and Stocks Led the Move Higher?

Health care led sector gains with a 2.6% jump, driven by strength in Regeneron (+8.17%), Moderna (+7.14%), and Eli Lilly (+8.81%).

Technology followed with a 0.53% increase, supported by Micron (+7.62%) and Seagate (+6.84%). Utilities also added nearly 1% on the day.

On the downside, materials fell 1.45%, with Corteva down nearly 9%. Communication services and financials also finished in the red. The broad gains in defensive sectors indicate some investor caution despite the headline index strength.

What Should Traders Watch Next?

The market’s attention now turns to the duration of the shutdown and whether Congress can resolve funding quickly enough to resume data flow ahead of the next Fed decision. Without the jobs report or other key metrics, sentiment-driven moves may dominate trading in the near term. Rate cut bets remain intact, but weaker-than-expected private employment data adds pressure on the Fed to act.

Traders should watch for updates from lawmakers, Fed commentary, and secondary indicators that could offer clues in the data void. The market remains buoyant, but further upside could depend on how fast the shutdown is resolved and whether upcoming inflation data confirms softening trends.

More Information in our Economic Calendar.