Both the S&P 500 ETF (SPY) and the Nasdaq 100 ETF (QQQ) closed higher with a government shutdown just hours away.
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President Trump said that a shutdown at midnight on Tuesday is “probably likely,” warning that Democrats face consequences that “are irreversible, that are bad for them.” Earlier this week, the Office of Management and Budget issued a memo detailing federal layoffs and program cuts in the event of a federal closure. The odds of a shutdown by October 1 currently stand at 88% on prediction platform Polymarket.
Key labor and inflation data that the Fed will use in its October 28-29 Federal Open Market Committee (FOMC) meeting will likely be delayed if the government closes its doors. Upcoming releases include nonfarm payrolls on October 3 and the Consumer Price Index (CPI) on October 15.
Trump announced ‘TrumpRx’ on Tuesday, a new direct-to-consumer website that will provide buyers with discounted drug prices negotiated by the government. Trump made the announcement alongside Pfizer (PFE) CEO Albert Bourla, who said that the company will offer some of its drugs at lower prices for Medicaid patients on the website. In return, Pfizer will receive a three-year grace period for its drugs produced outside of the country. A senior administration official added that TrumpRx will likely go live in early 2026.
Meanwhile, consumer sentiment is taking a hit from labor market fears. August’s U.S. job openings tallied in at 7.227 million and remain near a four-year low of 7.103 million set in September 2024. In addition, the hiring rate sits at 3.2%, the lowest since June 2024.
“The job market is frozen. Americans feel stuck. And it appears to be getting worse…” said Navy Federal chief economist Heather Long in an X post.
In September, The Conference Board’s (TCB) Consumer Confidence Index (CCI) fell by 3.6 points to 94.2, the largest monthly drop in a year and the lowest reading since April. A reading of 100 or above signals optimism about the economy, while a reading of 80 or below points to pessimism. Consumers also remain frustrated with the labor market, with 26.9% of respondents saying that jobs were “plentiful” compared to 30.2% in August.
“The share of consumers thinking that a recession is very likely over the next 12 months rose slightly in September, to the highest level since May,” said TCB.
The S&P 500 (SPX) closed with a 0.41% gain, while the Nasdaq 100 (NDX) returned 0.28%.
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