The S&P 500 closed at a record high on Wednesday, shrugging off concerns about a U.S. federal government shutdown. The broad market index rose 0.34% to finish at 6,711.20 after hitting an intraday all-time high. The Nasdaq Composite added 0.42% to close at 22,755.16, while the Dow Jones Industrial Average edged up 43 points, or 0.09%, to 46,441.10.
It marked a sharp turnaround from earlier in the session, when the S&P 500 was down half a percent. Healthcare names led the rebound, with strong gains in Regeneron Pharmaceuticals and Moderna. The rally capped off a strong September, in which the S&P rose more than 3.5%.
Shutdown impact and political response
The shutdown began after Senate Republicans failed to advance a temporary spending bill. Democrats pushed to extend healthcare tax credits as part of the package. The Congressional Budget Office estimates about 750,000 federal employees will be furloughed.
President Trump has threatened permanent layoffs, intensifying risks. Vice President JD Vance confirmed the administration “will have to lay some people off if the shutdown continues,” though he suggested the stoppage might be brief, citing cracks among moderate Democrats.
Markets weigh economic risks
Previous shutdowns have often had limited impact on markets, but analysts warn the backdrop is different this time. Investors face multiple headwinds: a slowing labour market, persistent inflation, high stock valuations and heavy concentration in big-tech names.
The immediate concern is the disruption of economic data. With the Labor Department ceasing operations, Friday’s nonfarm payrolls report will not be released. That leaves the Federal Reserve without a key indicator ahead of its late-October meeting.
ADP data released Wednesday showed private payrolls fell by 32,000 in September, against expectations for a 45,000 increase. It was the largest decline since March 2023. Analysts say the weakness, combined with the shutdown, reinforces expectations for another Fed rate cut later this month.
Australian market set to rise
Australian shares are poised to follow Wall Street higher. The SPI futures point to a 0.5% gain, stronger.
Gold hit a new record at US$3,895 an ounce, extending a five-day rally, with Australian miners set to benefit.
Today, attention turns to the Reserve Bank’s Financial Stability Review and new reports on household spending and the trade balance.
