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U.S. stock index futures steadied on Thursday near record highs, with investors shrugging off the start of a federal government shutdown and focusing instead on the likelihood of further Federal Reserve rate cuts this year.
At 05:45 ET (09:45 GMT), Dow Jones Futures were little changed, while S&P 500 Futures added 12 points (0.2%) and Nasdaq 100 Futures climbed 85 points (0.4%). On Wednesday, all three major benchmarks logged a fourth straight day of gains, with the S&P 500 closing at a fresh record high.
Government Shutdown Begins
The U.S. government entered a shutdown early Wednesday after lawmakers failed to pass new funding. Key federal services, from air traffic control to disaster relief, face disruption, while the release of nonfarm payrolls data scheduled for Friday is expected to be delayed.
President Donald Trump deepened divisions by threatening permanent layoffs for federal workers and cutting funds for Democrat-leaning states, raising concerns about how long the standoff could last. The last shutdown under Trump in 2018-19 stretched 35 days, costing the economy an estimated $11 billion.
Betting markets currently see the most likely outcome as a one-to-two week shutdown, though odds of a longer standoff remain elevated.
Labor Market Weakness Supports Rate Cut View
The shutdown has sharpened focus on alternative indicators as traders seek clarity on the labor market outlook. Private payrolls data released earlier this week showed the steepest drop in over two years, while job openings data pointed to weaker hiring momentum.
The Fed cut rates by 25 basis points last month, citing a cooling labor market, and investors are now betting on further easing in the remaining two policy meetings of 2025. Delays in official data releases could amplify market sensitivity to private labor reports, such as Challenger layoffs due Thursday.
Corporate Spotlight: Pharma and Tech
In equities, pharmaceutical companies remain in focus after Pfizer (NYSE:PFE) said it had reached a deal with the Trump administration to cut Medicaid drug prices in exchange for tariff relief, a move Trump said he expects other drugmakers to follow.
Elsewhere, OpenAI was valued at $500 billion after a $6.6 billion secondary share sale, according to media reports. The deal pushes the ChatGPT-maker past SpaceX as the world’s most valuable startup, underscoring continued investor appetite for artificial intelligence despite broader tech volatility.
