Dow futures experienced a significant decline on Wednesday following the U.S. government’s decision to halt operations, which led to increased demand for safe haven gold as investors expressed concerns regarding the possible impact on economic growth. Nike, however, presented some positive developments as its turnaround strategy seemed to yield results in the first quarter.

The U.S. government suspended a significant portion of its operations on Wednesday following the failure of a last-minute spending bill supported by the Republican party to pass a Senate vote, amidst ongoing opposition from the Democrats. This marks the 15th government shutdown since 1981 and the second occurrence during the presidency of Donald Trump, who has leveraged this situation to issue threats regarding the potential dismissal of additional federal employees. This year has witnessed the termination of tens of thousands of employees, with more than 150,000 federal workers set to exit the payrolls this week following buyouts, marking the largest workforce reduction in eight decades. The absence of a definitive resolution to the stalemate has raised concerns that this shutdown may extend beyond previous budget-related closures, particularly due to the pronounced political divergences between the opposing factions. The longest government shutdown in U.S. history extended for 35 days across December 2018 and January 2019, occurring during Trump’s initial term in office, stemming from a conflict regarding border security. The impending shutdown is expected to impede the publication of the September employment report, disrupt air travel, suspend scientific research initiatives, delay compensation for U.S. military personnel, and result in the furlough of 750,000 federal employees, incurring a daily expense of $400 million.

Dow futures declined on Wednesday as the U.S. government entered a shutdown, raising concerns among investors regarding its potential effects on economic growth. At 03:00, the S&P 500 futures traded 55 points, or 0.8% lower; Nasdaq 100 futures dropped 155 points, or 0.6%; and Dow futures fell 295 points, or 0.6%. The major indices experienced an uptick on Tuesday, even in the face of a looming shutdown, as investors capitalized on an unexpectedly robust trading month in September. The third quarter, concluding on Tuesday, recorded a 7.8% increase in the widely followed S&P 500 index. Historically, Wall Street tends to experience upward movement during government shutdowns, as evidenced by an average increase in stocks during the last five instances of such events. However, this situation may prove to be more challenging than typical, as investors continue to express concerns regarding a decelerating labor market, coupled with the Trump administration’s apparent commitment to significantly reduce federal payrolls. The ADP private payrolls report will attract attention later in the session, while earnings from packaged foods leader Conagra Brands take center stage in the corporate sector.

One significant outcome of the U.S. government shutdown is the probable postponement of a highly anticipated labor market report on Friday – the closely monitored nonfarm payrolls data for September. Investors are expected to scrutinize the payrolls report for clearer signals regarding the labor market, which has shown signs of cooling and was a significant factor behind the Federal Reserve’s decision to cut rates in September. This week, skepticism regarding additional rate cuts emerged in the markets, prompted by a series of hawkish statements from Federal Reserve officials. Dallas Fed President Lorie Logan highlighted increased caution regarding future interest rate cuts, indicating on Tuesday that the labor market must weaken further for the central bank to contemplate additional rate reductions. Data released on Tuesday indicated a slight increase in U.S. job openings for August, accompanied by a decline in hiring. This trend aligns with the prevailing softening conditions in the labor market, which may provide the Federal Reserve with the justification to implement another rate cut this month. The ADP National Employment Report is anticipated later in the session, with projections indicating a modest increase of 50,000 private-sector jobs. This may represent the final labor market data to be disclosed for a considerable period.

Nike will attract attention on Wednesday, following the release of first-quarter results that exceeded expectations, indicating that its turnaround strategy is gaining traction despite challenges in China and margin pressures from tariffs. The footwear retailer announced a quarterly profit that exceeded Wall Street expectations following the close on Tuesday, bolstered by robust wholesale revenue, resulting in a more than 3% increase in shares during after-hours trading. Nike announced an unexpected increase in first-quarter revenue, indicating initial progress for CEO Elliott Hill’s strategy aimed at restoring the brand to its previous prominence. That said, Nike now anticipates that tariffs will impose a cost of approximately $1.5 billion this year, an increase from the earlier expectation of $1 billion, as the company produces nearly all its footwear in countries like Vietnam that have faced significant duties under U.S. President Donald Trump. “This quarter Nike drove progress through our Win Now actions in our priority areas of North America, Wholesale, and Running,” Hill stated.

Gold prices reached a new record high earlier in the session, driven by increased inflows into the safe haven due to the U.S. government shutdown. Spot gold reached an unprecedented level of $2,875.53 per ounce, whereas gold futures for December peaked at $3,903.45 per ounce. The yellow metal has reached a succession of record highs this week, driven by mounting indications of political stalemate in the U.S., which has exerted pressure on the dollar and influenced traders to favor safe-haven assets. This week has seen substantial increases in the prices of other precious metals, driven by a spillover in safe haven demand from gold. Platinum and silver have reached 12- and 14-year highs, respectively. Oil prices stabilized on Wednesday following two consecutive days of declines, as investors assessed OPEC+ intentions regarding a potential increase in output next month and the implications of a U.S. government shutdown that may affect economic activity and fuel demand. Brent futures increased by 0.4% to $66.29 per barrel, while U.S. West Texas Intermediate crude futures saw a rise of 3% to $62.58 per barrel. On Monday, Brent and WTI experienced settlements that were more than 3% lower, marking their most significant daily declines since August 1. On Tuesday, they each experienced a further decline of 1.5%. The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, may reach a consensus to elevate oil production by as much as 500,000 barrels per day in November, a figure that is three times the increment established for October.