Wall Street takes sour view of government shutdown, economic data blackout

U.S. stocks fell on Wednesday as investors feared a prolonged government shutdown would harm the economy — and key data on its health.

The Dow Jones Industrial Average and other major indexes opened in negative territory after Capitol Hill lawmakers failed to agree to keep federal operations open, triggering a shutdown with no clear end in sight.

The shutdown will result in a blackout for economists and investors hoping to gauge the state of the economy.

The Bureau of Labor Statistics is not expected to release its jobless claims report on Thursday or its September jobs report on Friday.

The situation placed a greater focus on a private payroll report from ADP, which on Wednesday said firms cut 32,000 jobs in September. 

It was the sharpest drop since March 2023, a further sign of a tightening labor market.

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Notable declines occurred in the professional/business services (-13,000) and leisure and hospitality (-19,000) sectors.

Manufacturing was down 2,000 positions, even as President Trump tries to make more products in America, while health and education broke the trend by adding 33,000 positions.

“Despite the strong economic growth we saw in the second quarter, this month’s release further validates what we’ve been seeing in the labor market, that U.S. employers have been cautious with hiring,” said ADP chief economist Nela Richardson.

The report is compiled from weekly payroll data from millions of firms. 

The official Bureau of Labor Statistics report often differs from the ADP report. With the federal numbers on hold, the ADP report may dominate the narrative.

The Federal Reserve cut interest rates earlier this month, saying the jobs situation eclipsed their concerns about possible inflation from President Trump’s tariffs.

The central bank is split over whether to slash rates again, and the shutdown-driven data blackout could make it hard for the Fed to get a full sense of the economic outlook.

The Trump administration says Democrats are the ones holding back the economy. 

The Senate GOP majority could not overcome a filibuster of a funding bill late Tuesday as Democrats demanded a permanent extension of pandemic-era expansions of Obamacare subsidies that cap out-of-pocket premium costs at 8.5%.

“Democrats spent years giving taxpayer-funded healthcare to illegal aliens and, as promised, President Trump put a stop to it,” Vice President J.D. Vance said on X. “Senate Democrats are shutting down the government and holding the economy hostage because they want to reinstate those benefits for illegal aliens.”