Stock Market Update: Wall Street Reacts to Government Shutdown

On Wednesday, the S&P 500 and NASDAQ indices dipped as investors considered the potential long-term effects of a federal government shutdown on the U.S. economy.

The S&P fell by 0.2%, while the NASDAQ Composite dropped 0.3%, losing over 70 points shortly after markets opened.

Meanwhile, the Dow Jones industrial average remained relatively stable after an initial decline of 52 points.

This downturn followed a robust close in September, where the S&P 500 saw a significant increase of more than 3.5%.

In a concerning report, ADP announced that private sector employers cut 32,000 jobs in September, falling short of economists’ expectations of 45,000 new jobs.

This drop marked the most significant loss since March 2023.

Additionally, ADP revised its August figures, adjusting from an increase of 54,000 jobs to a mere 3,000.

Traders awaited the September non-farm payroll report, which wasn’t released due to the Labor Bureau’s closure during the shutdown; instead, they are relying on private sector studies.

“The market seemed to be seeking reasons to sell off after overcoming typical September weaknesses,” commented Jay Woods, chief market strategist at Freedom Capital Market, to CNBC.

“While shutdowns were somewhat anticipated, investors appear to be focused on past gains without a sense of urgency to find solutions.”

In an interesting side note, gold prices surged to a new high, exceeding $3,900 per ounce, influenced by a 0.2% drop in the dollar, which now stands at 97.61, marking its worst annual decline since 2003.

This uptick in gold prices represents the 39th record set this year, indicating a rising demand for the precious metal as the U.S. dollar has already depreciated by 10% in 2025.

Historically, the S&P 500 has weathered government shutdowns relatively well.

During a five-day closure in November 1995, the index rose by 1.36%, enjoying an average daily increase of 0.27%.

Another shutdown from December 1995 to January 1996 extended for 14 days, with the S&P showing a total rise of 0.16%, essentially remaining flat on a daily basis.

In October 2013, during a 14-day shutdown, the S&P 500 gained 3.17% overall, which translates to an average daily return of 0.23%.

In January 2018, the index saw a 0.81% increase during a brief two-day shutdown, achieving an average return of 0.4% per day.

The longest government shutdown in recent history occurred over 22 trading days from December 2018 to January 2019; during that period, the S&P 500 experienced a notable surge of 10.43%, with daily returns averaging 0.47%.