The Dow Jones Industrial Average (DJIA) was little changed on Tuesday, with trading momentum slowing as investors braced for a potential US government shutdown. Lawmakers have yet to agree on a spending bill ahead of the new fiscal year, raising the prospect of a federal furlough that could disrupt economic data releases.
NFP release in doubt as shutdown looms
Friday’s Nonfarm Payrolls (NFP) report — a key indicator for Federal Reserve (Fed) policy — is at risk of being delayed if the shutdown proceeds. Labor market data has grown increasingly critical for investors as the Fed weighs interest rate cuts to support a slowing economy while keeping inflation under control.
President Donald Trump shifted tone over the past week, from expressing optimism about a budget deal to conceding that a shutdown now appears likely. He has also warned of “irreversible” measures during the closure, including large-scale federal job cuts and reductions in benefits.
The Bureau of Labor Statistics (BLS) has confirmed that a shutdown would halt or delay the release of the September jobs report. This uncertainty comes at a pivotal moment, as investors closely monitor employment trends to assess the Fed’s next move.
Rate cut expectations remain elevated
According to the CME FedWatch Tool, markets are pricing in a 95% probability of a 25-basis-point cut at the October 29 meeting. Expectations for another move in December remain split: nearly 75% of futures traders anticipate a third straight cut, but a growing share of investors believe the Fed may pause before cutting again in January.
