S&P 500 turns negative as government shutdown looms
Investing.com — The S&P 500 turned negative Friday, as concerns about the impact of a government shutdown forced stocks to give up gains following data showing easing inflation.
The S&P 500 fell 0.4%, the Dow Jones Industrial Average fell 0.6%, 205 points, Nasdaq rose 0.01%.
TheHouse of Representatives failed to pass a short-term spending measure Friday that would have kept the government open until Oct. 31, stoking fears that a government shutdown on Oct. 1 is increasing likely.
A government shutdown is now almost priced in, Morgan Stanley says, and could dent fourth-quarter economic growth.
“A government shutdown is near-consensus in DC, but the question is how long it will last. We “A government shutdown presents the risk that 4Q GDP growth could be negative. They continue to see the Fed on extended hold into 1Q24,” Morgan Stanley added.
The core personal consumption expenditures price index, the Fed's preferred inflation measure, slowed to 0.1% from 0.2%, stoking investor optimism that the tide is starting to turn in the Fed’s fight to bring down inflation.
The ongoing slowdown in “core inflation, the basis for guiding monetary policy, continues on a disinflationary trend, perpetuating the notion the Fed is at or near its terminal level,” Stifel said in a note.
The inflation data pressured Treasury yields, but they still remain supported by expectations that the Fed is set to keep rates higher for longer.
Big tech, which has suffered a hit from rising Treasury yields in recent weeks, traded mixed, with Alphabet (NASDAQ:GOOGL) and Meta Platforms (NASDAQ:META) leading to the downside, despite the retreat in yields.
The United Auto Workers, or UAW, union expected strikes against General Motors Company (NYSE:GM) and
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