Shutdown Stress Ripples From Airports to Money Markets as FAA Cuts Flights

Stocks opened on the back foot as the shutdown’s ripple effects darkened risk appetite: the VIX jumped to roughly 20 (up about 4%), while haven gold hovered near $4,006 and crude traded around $60. With policy uncertainty clouding the outlook and travel and funding markets bracing for disruption, investors marked down early bids in the major averages at the opening bell, reflecting a defensive tilt that’s become the default stance until Washington breaks the impasse. At the opening bell, the Dow fell 229.83 points (-0.49%) to 46,882.5, the S&P 500 lost 53.50 (-0.80%) to 6,666.82, the Nasdaq dropped 300.19 (-1.30%) to 22,753.8, and the Russell 2000 slipped 2.90 (-1.21%) to 237.45. The VIX stood at 20.35 (+0.85, +4.36%).

The ongoing U.S. government shutdown continues to have a negative impact on various parts of the economy. The Federal Aviation Administration outlined a staged reduction in domestic flights, reaching 10% by Nov. 14, across 40 of the nation’s busiest airports, a response to stress in the air traffic system as controllers continue working without pay. “My department has many responsibilities, but our number one job is safety,” said U.S. Transportation Secretary Sean P. Duffy. “This isn’t about politics, it’s about assessing the data and alleviating building risk in the system as controllers continue to work without pay.” FAA Administrator Bryan Bedford added, “We are seeing signs of stress in the system, so we are proactively reducing the number of flights to make sure the American people continue to fly safely.” Airlines must issue full refunds for cancellations, though carriers are not required to cover secondary costs. International services aren’t mandated to be cut.

Airlines have already begun trimming schedules. Bloomberg reported that United will remove about 510 services between Friday and Sunday, Delta about 170 flights on Friday, Southwest roughly 120 on the day, and American about 220 daily through Monday—pressure that American’s CEO Bob Isom said is starting to dent Thanksgiving bookings. Those reductions, combined with FAA constraints, raise the risk of broader travel disruptions into the holiday period.

Funding markets are also flashing warning signs. Torsten Slok, chief economist at Apollo Global Management, said the shutdown has amplified reserve drainage—via a higher Treasury General Account balance and shifting cash out of the Fed’s reverse-repo facility—pushing key overnight benchmarks such as SOFR and TGCR above the Fed’s interest on reserve balances. If rate volatility persists, “it could begin to have consequences for credit markets,” he cautioned. SOFR and TGCR are overnight funding rates that influence short-term borrowing costs; the IORB is the rate paid by the Fed on bank reserves.

Politics remains a swing factor. Senate Minority Leader Chuck Schumer and House Minority Leader Hakeem Jeffries urged President Trump to convene bipartisan talks “anytime and anyplace” to end the government shutdown, underscoring the standoff’s reach from policy into everyday commerce.

In corporate news, Tesla shareholders approved Elon Musk's pay package, a vote watched as a proxy for confidence in the company’s AI and robotics ambitions. Wedbush’s Dan Ives wrote that “we continue to believe that the AI valuation is getting unlocked, and we believe the march to an AI-driven valuation for TSLA over the next 6–9 months has now begun in our view,” maintaining an OUTPERFORM rating and a $600 price target. While not central to shutdown mechanics, the decision highlights how both policy-driven uncertainty and company-specific AI narratives are influencing risk appetite in the equities market.