S&P futures increased on Friday following the market’s achievement of new highs in the prior session, propelled by robust performance in the artificial intelligence sector, which seemed to overshadow apprehensions regarding a potential U.S. government shutdown. Futures associated with the Dow Jones Industrial Average increased by 128 points, representing a 0.3% rise. S&P 500 and Nasdaq 100 futures each experienced an increase of 0.3%. The three principal U.S. indexes ascended to unprecedented heights on Thursday, supported by advancements in Nvidia, which likewise reached a historic peak.
The government shutdown, now in its third day as of Friday, has intensified investors’ existing worries this year regarding macroeconomic and policy challenges, inflation threats, and a decelerating labor market. Investors are closely monitoring the duration of the shutdown to assess the gravity of its economic implications. Historically, shutdowns have not significantly influenced market dynamics. “[Thursday’s] market moves suggest that the history of government shutdowns still holds sway,” Paul Christopher, noted in a communication. “These events exert a slight adverse effect on the economy in the short term; however, the subsequent resumption of federal operations mitigates those minor disruptions.” On Thursday, Treasury Secretary Scott Bessent conveyed that the ongoing interruption in government funding might result in “a hit to the GDP, a hit to growth and a hit to working America.”
President Donald Trump has issued warnings of significant layoffs, raising persistent apprehensions regarding the labor market. On Thursday, he stated that the Democrats have provided him with a “unprecedented opportunity” to reduce the size of federal agencies. The Congressional Budget Office projects that 750,000 federal workers will experience furloughs on a daily basis. The shutdown has resulted in a significant disruption of economic data availability. The Labor Department’s suspension of nearly all operations has hindered the scheduled release of the September nonfarm payrolls report, thereby reducing the economic data available for the Federal Reserve to consider in its interest rate deliberations at the upcoming October meeting. However, it also eliminates a variable that could exert pressure on equities. The shutdown commenced following Congress’s inability to secure a consensus on government funding this past Tuesday. Leading Democrats have maintained their position on the necessity of passing a spending bill aimed at extending health care tax credits for millions of Americans, prompting a response from Trump and senior Republicans. Notwithstanding the prevailing discord, equities are poised for a successful week.
The S&P 500 has increased by approximately 1.1% week to date, whereas the 30-stock Dow has risen by 0.6%, and the Nasdaq has advanced by 1.6%. Sentiment has surged, propelled by an ever-growing enthusiasm for AI. Concerns regarding a slowdown and apprehensions about a “bubble” are swiftly giving way to the Fear Of Missing Out. Goldman Sachs’ trading desk noted that Fed cuts have faded from investors’ considerations, while momentum trading, particularly in AI, is gaining traction.