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Stock Futures Rise After Averting a Government Shutdown

October 2, 2023
minute read

U.S. stock-index futures experienced a significant surge in value on Sunday night following Congress narrowly avoiding a government shutdown on Saturday.

Late on Sunday, Dow Jones Industrial Average futures rallied by approximately 200 points, representing a 0.6% increase. Similarly, S&P 500 futures and Nasdaq-100 futures also showed gains.

On Saturday night, Congress passed a bipartisan stopgap spending bill, which effectively prevented a government shutdown, at least for the time being. This move also put House Speaker Kevin McCarthy's position in jeopardy, as Republican Rep. Matt Gaetz of Florida announced his intention to oust McCarthy from his leadership role due to perceived breaches of agreements with hardline Republicans. In response, McCarthy, a California Republican, welcomed the challenge.

Stephen Innes, managing partner of SPI Asset Management, remarked in a note on Sunday that investors initially reacted with relief as one of the potential hurdles to Q4 economic growth seemed to be temporarily resolved. Innes noted that while policymakers have deferred addressing the issue for now, this could lead to a slight increase in yields as market attention shifts from the negative economic consequences of a government shutdown to concerns about the Federal Reserve's hawkish stance. He also pointed out that the proximity of the new deadline to the holiday season makes a budget resolution more likely.

The past month had been challenging for Wall Street, with the S&P 500 posting its most significant monthly loss of the year, down nearly 5%. The Dow Jones Industrial Average and Nasdaq Composite also ended the month on a negative note.

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Valentyna Semerenko
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