Stocks Down Amid Government Shutdown Threat and Consumer Confidence Drop

US stocks fell as the government hurtled towards a potential shutdown, sparking economic uncertainty. Consumer confidence unexpectedly dropped to a 5-month low in September, reflecting growing pessimism about inflation and the job market. Stocks impacted include TPG, StepStone Group, P10, Bread Financial, and Payoneer, which all traded down by 3.4% to 4.8%.

US stocks fell sharply on Tuesday as the government teetered on the brink of a potential shutdown, sparking economic uncertainty. The looming shutdown, set to occur at midnight if funding is not extended, has cast a pall over the market, with consumer confidence unexpectedly plummeting to a 5-month low in September.

The Conference Board's consumer confidence index registered a 94.2 reading, down 3.6 points from August and below the Dow Jones estimate for 96.0 Consumer confidence is lower than expected as Wall Street braces for shutdown data blackout^[2]. The decline in consumer confidence was driven by growing pessimism about inflation and the job market. The "present situation" index hit its lowest level in a year, reflecting a bleak assessment of business conditions and job availability.

Meanwhile, the Bureau of Labor Statistics reported that job openings totaled 7.23 million in August, up 19,000 from July but down 422,000 from a year ago Consumer confidence is lower than expected as Wall Street braces for shutdown data blackout^[2]. The report, which may be the last one before the shutdown, showed a slower pace in both hiring and total separations. Quits fell by 75,000, a gauge of worker confidence for finding new jobs.

The shutdown threat has weighed heavily on investor sentiment. Several companies, including TPG, StepStone Group, P10, Bread Financial, and Payoneer, saw their stocks drop by 3.4% to 4.8% on Tuesday. The Federal Reserve, which closely watches the labor market, has indicated that it may lower its benchmark borrowing rate by half a percentage point by the end of the year, with cuts at the October and December meetings.

Vice President JD Vance has indicated that the government is on track to shut down, blaming Democrats for the impasse Vance Says US Headed for Shutdown After Talks With Democrats (1)^[1]. President Donald Trump met with top Democratic and Republican congressional leaders less than 48 hours before the shutdown deadline, but no progress was made.

The looming shutdown has also impacted the release of economic data. The Conference Board's report showed a growing divide in labor market perceptions, with the share of respondents indicating that jobs were "plentiful" slipping to 26.9%, down more than 3 percentage points from August Consumer confidence is lower than expected as Wall Street braces for shutdown data blackout^[2]. The survey also showed more pessimism about finances, with views on respondents' current financial situation seeing its biggest one-month drop since the question was asked in July 2022.

Should the spending impasse be resolved by Friday, the BLS is expected to show payroll growth of 51,000 in September, following just 22,000 in August Consumer confidence is lower than expected as Wall Street braces for shutdown data blackout^[2].