Stocks Slip on Shutdown Worries; Oil Prices Drop: Markets Wrap

(Bloomberg) — Stocks retreated as the US government veering toward a shutdown stoked anxieties about the possibly delayed release of key economic data the Federal Reserve needs to keep cutting interest rates.

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The S&P 500 fell 0.2% to kick off the last session of the month. Gold’s record-breaking rally came to a halt. The Bloomberg Dollar Spot Index wavered. Treasuries are headed for a third straight quarter of gains. Oil extended a sharp decline as OPEC+ considers boosting the pace of its output hikes in the coming months.

Even with Friday’s release of nonfarm payrolls data in doubt given a seemingly imminent US government shutdown, traders will still get some glimpses this week of how the labor market is faring. The JOLTS report releasing on Tuesday will offer a snapshot on job openings while Wednesday’s data will give traders insight on company hiring.

Still, many federal operations would pause in the even of a shutdown, and The Bureau of Labor Statistics — responsible for a number of gold-standard US economic releases — would cease operations and likely delay Friday’s payroll report.

This hindrance wouldn’t change the Fed’s decision for at least its upcoming meeting in October, according to David Seif, Nomura’s chief economist for developed markets.

“The less data that comes out, the less reason the Fed would have to deviate from the dot plot,” he said on Bloomberg Television on Tuesday. “The dot plot indicates 25 basis points in October. It is our view that will happen, whether or not they get the data.”

Traders have also been hearing from a handful of Fed speakers. Boston Fed President Susan Collins said further rate reductions may be appropriate this year given a weaker labor market, but officials need to remain wary about the possibility of persistent inflation. Fed Vice Chair Philip Jefferson warned that the central bank faces a cooling labor market alongside rising inflation pressures, complicating the policy outlook.

“I see the risks to employment as tilted to the downside and risks to inflation to the upside,” Jefferson said in remarks prepared for the fourth International Monetary Policy Conference hosted by the Bank of Finland. “It follows that both sides of our mandate are under pressure.”

Despite the uncertainty swirling in markets, the S&P 500 is headed for its best September in 15 years, fueled by looser policy and optimism over artificial intelligence.

“We would remind investors that shutdowns are common, and once resolved, agency operating budgets and employees are made whole, blunting any broader market and economic impacts,” wrote Monica Guerra, head of US Policy at Morgan Stanley Wealth Management.

Corporate News:

EchoStar Corp. shares jumped as the satellite-TV company engaged in talks to sell some of its wireless spectrum to Verizon Communications Inc. Exxon Mobil Corp. plans to cut about 2,000 jobs globally as the Texas oil company consolidates smaller offices into regional hubs as part of its long-term restructuring plan. Spotify Technology SA Chief Executive Officer Daniel Ek is stepping aside after almost two decades at the music streaming company he co-founded, leaving the leadership in the hands of two trusted executives. China’s state-run iron ore buyer has told major steelmakers and traders to temporarily halt purchases of all new BHP Group cargoes, escalating a pricing dispute that risks upending one of the mining giant’s most important trading partnerships. UBS Group AG reiterated its scathing critique of Switzerland’s planned changes to banking regulation, saying they may put the firm’s role in the country at risk. Boeing Co. has started working on a next-generation single-aisle aircraft that could eventually replace the 737 Max, the Wall Street Journal reported. Some of the main moves in markets:

Stocks

The S&P 500 fell 0.2% as of 9:33 a.m. New York time The Nasdaq 100 fell 0.3% The Dow Jones Industrial Average was little changed The Stoxx Europe 600 rose 0.2% The MSCI World Index was little changed Currencies

The Bloomberg Dollar Spot Index was little changed The euro was unchanged at $1.1727 The British pound was little changed at $1.3427 The Japanese yen rose 0.4% to 147.95 per dollar Cryptocurrencies

Bitcoin fell 1% to $113,223.04 Ether fell 1.8% to $4,154.11 Bonds

The yield on 10-year Treasuries declined one basis point to 4.13% Germany’s 10-year yield advanced one basis point to 2.72% Britain’s 10-year yield advanced one basis point to 4.71% Commodities

West Texas Intermediate crude fell 1.3% to $62.62 a barrel Spot gold fell 0.4% to $3,818.14 an ounce This story was produced with the assistance of Bloomberg Automation.

–With assistance from Michael Msika, Sagarika Jaisinghani, Jack Ryan, Andre Janse van Vuuren, Eman Abouhassira and Isabelle Lee.

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