U.S. stock futures took a leg lower Tuesday as worries grew that a U.S. government shutdown was back on the table. The meeting between President Donald Trump and congressional leaders from both parties ended without any agreement, heightening anxieties across financial markets. As Vice President JD Vance noted, Democrats have refused to come to the table. This uncertainty would do much to exacerbate the crisis and may well lead to a shutdown.
To make matters worse, President Trump threatened mass firings of federal workers if a shutdown happens. The Dow Jones Industrial Average futures were down 109 points, or 0.2%, showing investor nervousness and caution. Quarterly loss Vail Resorts, the owner of ski resorts including Vail, Breckenridge and Whistler Blackcomb, announced an adjusted loss of $5.08 per share, higher than the expected loss of $4.73. Because of this, the company’s stock fell 2% in after-hours trading.
Even with this bad news, several indices have put on a strong face this month. Despite seasonal tendencies towards weakness, the S&P 500 has been up more than 3% so far in September, with the Dow Jones Industrial Average up 1.7%. So far this month, the Nasdaq Composite has rocketed up 5.3%. It’s on pace for an equally astounding almost 11% increase for the quarter. The S&P 500 is likewise up 7.4% quarter to date.
Issues with a potential government shutdown reach further than knee-jerk market responses. According to Jack Janasiewicz, a financial strategist, such an event could lead to “tangential effects” on near-term market sentiment and volatility. A shutdown may cause credit rating agencies to reconsider the overall health of U.S. credit. This dangerous double take would risk a whole new layer of instability to an already fragile economy.
The backdrop of these developments includes Vail Resorts’ financial performance, which reported revenues of $271 million, falling short of analysts’ expectations of $274 million. This disappointing report has raised questions about the broader impacts on the hospitality and tourism sectors as they navigate a challenging economic environment.
Investors are watching the direction of the negotiations unfolding in Washington D.C. They know how damaging these talks can be for the administration and for the financial markets. Lawmakers are unable to come to an agreement, which only increases the uncertainty surrounding fiscal policy. This confusion is leading to an overblown concern with its negative impact on economic growth.