Tonight’s Highlights | U.S. Government Shutdown Seems “No Big Deal,” Major Index Futures All Rise
On Thursday pre-market, U.S. stock index futures edged higher, with investors showing little interest in concerns over the latest U.S. government shutdown.
As of this writing, Dow Jones futures rose 0.02%, S&P 500 futures gained 0.28%, and Nasdaq 100 futures climbed 0.57%.
The major U.S. indices posted “four straight gains” on Wednesday, with the Dow and S&P 500 closing at all-time highs, as markets bet the shutdown will be brief and limit economic damage. The day before, Democratic and Republican leaders failed to agree on a funding deal by the deadline, leading to the first U.S. government shutdown in seven years.
For investors, the key question is how long the impasse lasts. Reports say senators will take a break for Yom Kippur, with voting not resuming until the 3rd, meaning the shutdown could last at least three days. On prediction markets, traders are betting on nearly two weeks.
Dan Niles, founder and portfolio manager at Niles Investment Management, posted on X: “I think this shutdown could last longer than 2018, but other factors will matter more.”
He listed three “more important factors”: 1) Solid Q3 earnings season ahead; 2) Sustained AI optimism; 3) The Fed’s October 29 meeting (he expects three cuts this year).
“In short, I think we’ll see some volatility but the market will grind higher to new highs,” Niles added.
Historically, shutdowns haven’t hurt stocks much, but with policy and macro instability, AI-led rebound valuations and concentration at highs, and ongoing inflation worries, investors are watching closely. Trump’s threat to permanently fire federal workers during the shutdown heightens labor market slowdown fears.
Economic data disruptions during the shutdown are a top concern. Friday’s nonfarm payrolls could be delayed, as could Thursday’s initial jobless claims. Challenger, Gray & Christmas data showed U.S. employers cut hiring plans in September, though layoffs eased.
Overall, the shutdown’s further impact is unclear, but money markets have fully priced in a 25-basis-point Fed cut by month-end to support the labor market, with an 80% chance of another in December.
European markets traded higher, with Germany’s DAX up 1.44%, the UK’s FTSE 100 up 0.12%, and France’s CAC 40 up 1.51%.
Company News
Berkshire Hathaway to Buy Occidental Petroleum’s OxyChem for $9.7 Billion
Berkshire Hathaway, Warren Buffett’s firm, announced Thursday it will acquire Occidental Petroleum’s petrochemical subsidiary OxyChem for $9.7 billion in cash. This is Berkshire’s largest deal since its $11.6 billion Alleghany insurance acquisition in 2022.
Berkshire has repeatedly increased its Occidental stake, now over 28%, though Buffett has no plans for full control. Occidental’s stock rose over 1% pre-market on the news.
Amazon Launches New Private Label to Compete with Walmart and Costco
Amazon announced Wednesday the launch of “Amazon Grocery,” integrating its Amazon Fresh and Happy Belly lines. The brand will offer over 1,000 grocery items, nearly all under $5 with 4+ star ratings.
It directly targets Costco’s Kirkland Signature and Walmart’s Great Value, aiming to strengthen Amazon’s grip on price-sensitive consumers amid inflation.
DoorDash Completes Acquisition of UK Rival Deliveroo
U.S. food delivery giant DoorDash completed its acquisition of Deliveroo. In May, DoorDash and Deliveroo agreed on terms for DoorDash to buy Deliveroo for 180 pence per share in cash, valuing it at ~£2.9 billion.
Delta Air Lines Planes Clip Wings at Low Speed, One Minor Injury
Two Delta Air Lines regional jets clipped wings at low speed while taxiing at New York’s LaGuardia Airport, damaging one wing and injuring one person lightly. The planes, operated by Delta subsidiary Endeavor Air, had no impact on airport operations.
Delta said it will cooperate with the Port Authority, FAA, and NTSB investigations.
OpenAI Completes Record $50 Billion Valuation Stock Sale
Sources say OpenAI completed a deal allowing current and former employees to sell ~$6.6 billion in shares at a $500 billion valuation, topping Elon Musk’s SpaceX as the world’s most valuable startup. A prior $40 billion SoftBank-led round valued OpenAI at $300 billion.
Employees sold to investors including Thrive Capital, SoftBank, Dragoneer, Abu Dhabi’s MGX, and T. Rowe Price. The source requested anonymity as details are confidential.