Global financial markets declined on Tuesday as concerns intensified over a potential shutdown of the US government. Investors considered the likely effect that delayed economic data might have on the Federal Reserve's upcoming interest rate decisions. At the same time, corporate news and changes in commodity prices contributed to market volatility.

Stock Market Declines Amid Shutdown Fears

US equities faced modest losses, with the S&P 500 and NASDAQ 100 each down 0.3%, and the Dow Jones Industrial Average falling 0.4%. The broader MSCI World Index edged lower by 0.1%, while Europe’s Stoxx 600 managed a 0.4% gain.

Sector performance showed notable weakness in software stocks, with Paychex slipping 4% following earnings results and Salesforce losing 2%. In contrast, NVIDIA shares advanced, supported by news of a $14.2 billion cloud-computing agreement between CoreWeave and Meta Platforms.

Canada’s benchmark S&P/TSX Composite Index lost 124 points, pressured by energy and base metals. Despite Tuesday’s retreat, major US indices remain on track for strong September gains, with the NASDAQ up 5% for the month and the S&P 500 poised for its best September in 15 years.

Currency, Bond, and Commodity Movements

Currency markets traded with limited volatility. The Bloomberg Dollar Spot Index was unchanged, the euro held steady at $1.1729, and the British pound rose 0.1% to $1.3444. The Japanese yen advanced 0.4% to 147.97 per dollar.

Bond yields showed little movement. The 10-year US Treasury yield stood at 4.14%, Germany’s equivalent yield was stable at 2.71%, and the UK’s benchmark held at 4.71%.

In commodities, West Texas Intermediate crude dropped 1.6% to $62.41 a barrel, extending a recent downturn as OPEC+ considered faster supply increases. Spot gold was unchanged, though futures climbed, with December contracts up $14.80 to $3,870 an ounce.

Economic Data and Federal Reserve Outlook

Markets are bracing for uncertainty if the government halts operations. The Labor Department has indicated it would not release September’s nonfarm payrolls data on schedule. Investors had expected the report to provide key insights into labor market conditions ahead of the Fed’s October policy meeting.

Fed officials remain cautious in their public remarks. Boston Fed President Susan Collins signaled openness to further rate reductions, citing labor market softness. Vice Chair Philip Jefferson, however, warned of rising inflation risks paired with weakening employment, creating a difficult balance for policymakers.

Analysts said that although in the past shutdowns have had little long-term impact on markets, a prolonged shutdown could increase volatility. Past episodes suggest a weakness in equities at the beginning, followed by a recovery once operations resume. Still, a potential lag in key macroeconomic indicators heightens investor concerns over policy clarity.

Corporate and Policy Developments

Several corporate headlines influenced trading. EchoStar shares climbed as the company entered talks to sell wireless spectrum assets to Verizon. Spotify announced CEO Daniel Ek’s decision to step aside, handing leadership to two senior executives. Exxon Mobil confirmed plans to cut 2,000 jobs as part of a restructuring.

In Washington, policy developments also drew attention. President Donald Trump is prepared to announce an agreement with Pfizer to lower drug prices, with shares of major pharmaceutical firms rising in response.

As the shutdown deadline approaches, markets remain on alert. Investors are balancing strong quarterly equity gains with the potential disruption from political gridlock and delayed economic reporting.

Also Read: US Stock Market Today: S&P 500 rises 0.2%, NASDAQ jumps 0.5%, Dow Jones slips 0.1%, US Dollar falls 0.3%, Gold surges 1.9%