US pre-open: Futures lower after Capitol Hill gridlock triggers federal shutdown
By Iain Gilbert
Date: Wednesday 01 Oct 2025
(Sharecast News) - Wall Street futures were in the red ahead of the bell on Wednesday after the Federal government shut down overnight, raising fears of a potentially prolonged disruption and its impact on financial markets.
As of 1240 BST, Dow Jones futures were down 0.51%, while S&P 500 and Nasdaq-100 futures had the indices opening 0.56% and 0.66% weaker, respectively.
The Dow closed 81.82 points higher on Tuesday at a new record high, despite heightened political uncertainty ahead of a looming government shutdown.
The Republican-controlled Senate failed to pass a temporary spending bill, with Democrats seeking to use the measure to extend healthcare tax credits. The Congressional Budget Office estimated that around 750,000 federal employees will be furloughed, while Donald Trump has warned that mass permanent job cuts would likely follow.
While markets have historically weathered shutdowns with limited volatility, this episode was seen as having the potential to prove more disruptive given elevated valuations, inflation risks, and signs of labour market softening. The length of the shutdown was expected to be a key focus, particularly with the Federal Reserve's next policy meeting scheduled for late October.
The Labor Department said it will suspend virtually all activity, including Friday's nonfarm payrolls report, leaving investors without one of the most closely watched indicators of US economic health. In its absence, today's ADP private payrolls data, due out at 1315 BST, will likely carry greater weight. The lack of NFP data leaves the Fed partially "flying blind", with markets currently pricing in a second rate cut later this month and another in December.
Gold hit a fresh record high as investors sought safe-haven assets, while Bitcoin also gained. Treasuries and the USD were broadly flat.
On the macro front, US mortgage applications fell sharply last week, snapping a three-week rally, according to the Mortgage Bankers Association, as rising Treasury yields pushed borrowing costs higher. For the week ended 26 September, total mortgage application volume dropped 12.7% from the prior week, matching the steepest weekly decline in nearly a year and trimming a combined 42% surge in applications over the previous three weeks. Applications to refinance a mortgage, which are more sensitive to short-term rate movements, plunged 21% week-on-week, while applications to purchase new homes eased by 1%.
Still to come, S&P Global's September manufacturing index will be released at 1445 BST, while the Institute for Supply Management's September manufacturing index will follow at 1500 BST.
Reporting by Iain Gilbert at Sharecast.com
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