Wall Street opened in the red on Wednesday as the US government officially shut down, igniting fears of a prolonged stoppage that could further strain an already fragile economy.
The S&P 500 slipped 0.4%, the Nasdaq Composite declined 0.6%, and the Dow Jones Industrial Average fell 42 points, or 0.1%.
The investors took a cautious turn as the shutdown, triggered by a Senate vote that rejected short-term funding, has raised concerns about delayed economic data releases and increased uncertainty for investors.
Wall Street’s mood was already sombre with stock futures slipping over 350 points in the pre-market trading on Wednesday.
The key economic reports, which are expected to be delayed after the shutdown, shape the market sentiment and allow investors to take crucial decisions while trading.
Wall Street open: What happened in pre-market trade today?
Amidst the whole spooky sentiment around the shutdown, Nike is one of the standout performers, with its shares surging about 4% following a fiscal first-quarter report that beat Wall Street forecasts.
The athletic apparel giant posted some solid earnings on Tuesday with adjusted earnings per share of $0.49, well above expectations of $0.28, and revenue came in at $11.7 billion, surpassing the anticipated $11.02 billion.
The company surely has some things to worry about, like its direct-to-consumer segment, but CEO Elliott Hill expressed confidence that its turnaround strategy is gaining traction amid challenges from tariffs and shifting consumer demand.
Lithium Americas also skyrocketed in the pre-market trading on Wednesday, surging over 30% after the US Department of Energy announced intentions to acquire a 5% stake in the company and its Thacker Pass lithium mine in Nevada.
The government’s move underscores securing domestic supply chains of critical minerals, crucial for electric vehicle batteries and clean energy initiatives.
The tech sector, which has witnessed a massive boom in the past few months, seemed a bit off on Wednesday as flagship stocks like Apple, Amazon, Meta, and Nvidia witnessed modest declines in pre-market trading.
Meanwhile, gold prices hit record highs near $3,872 an ounce, driven by uncertainty around the shutdown and weak labor market data, which could prompt the Federal Reserve to cut interest rates sooner than expected.
The gold rally points to investor preference for safe-haven assets amid mixed economic signals.
Bullish sentiment faces market risks
Historically, October is considered a volatile month as the markets look to rebound after slipping in September, and this year’s government shutdown has enhanced that sentiment.
Experts from NatAlliance and Wells Fargo recommend investors prepare for potential market fluctuations by hedging portfolios, increasing fixed income allocations, and maintaining cash reserves as dry powder for buying opportunities.
Some strategists also anticipate that reduced economic data could influence the Federal Reserve towards a possible rate cut this month.
Despite these concerns, sentiment surveys indicate that retail investors remain moderately bullish, with many feeling compelled to continue investing in equities to avoid missing out on potential gains in an ongoing bull market.
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