Futures for major U.S. stock indexes point to a slightly weaker open Tuesday, suggesting that equities may give back some of the gains recorded over the past two trading sessions.
Investors are likely weighing recent market strength against growing concerns over a possible government shutdown, which would occur if Congress fails to pass funding by 12:01 a.m. ET on Wednesday.
Democrats are insisting that a temporary funding bill extend enhanced Obamacare tax credits, while Republicans maintain that these issues should be addressed only after a funding bill is approved.
After Monday’s meeting between President Donald Trump and Congressional leaders, Vice President JD Vance said, “we’re headed to a shutdown because the Democrats won’t do the right thing.”
“Relations between the Democrats and Republicans are frostier than an Alaska morning, so markets are not confident on the prospects of agreeing a deal before midnight tonight,” noted Russ Mould, investment director at AJ Bell.
He added, “One of the biggest short-term concerns for markets is the impact this would have on the release of government data – particularly the jobs number due on Friday – without which the Federal Reserve might not feel as confident about cutting interest rates.”
Still, any sell-off could be muted, as lawmakers often reach last-minute agreements to prevent a shutdown.
On Monday, major indexes mostly climbed, extending gains from Friday. The Nasdaq added 107.09 points, or 0.5 percent, to 22,591.15; the S&P 500 rose 17.51 points, or 0.3 percent, to 6,661.21; and the Dow gained 68.78 points, or 0.2 percent, to 46,316.07.
Tech stocks contributed to Wall Street’s rally, with AI leader Nvidia (NASDAQ:NVDA) jumping 2.1 percent. Video game maker Electronic Arts (NASDAQ:EA) rose 4.5 percent after announcing an all-cash acquisition by a consortium including PIF, Silver Lake, and Affinity Partners, valuing the company at roughly $55 billion. EA shareholders will receive $210 per share, a 25 percent premium to the unaffected closing price of $168.32 on September 25.
Despite these gains, traders exercised caution, mindful of the looming shutdown risk. Market attention also turns to the Labor Department’s jobs report, scheduled for Friday, which could be delayed if the government closes, potentially influencing Federal Reserve interest rate decisions.
Computer hardware stocks outperformed, with the NYSE Arca Computer Hardware Index jumping 4.1 percent. Western Digital (NASDAQ:WDC) led the rally with a 9.2 percent gain after Morgan Stanley significantly raised its price target.
Brokerage stocks showed strength, reflected by a 1.4 percent rise in the NYSE Arca Broker/Dealer Index.
Energy stocks, however, weakened amid falling crude oil prices, pulling the NYSE Arca Oil Index down 2.3 percent and the Philadelphia Oil Service Index down 1.7 percent.
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