Wall Street Braces for Shutdown: Stocks Rally as Fed Cuts Loom

U.S. stock futures climbed modestly Monday, with S&P 500 futures up ~0.3%, as traders braced for a looming government shutdown ^[1].
All three major indexes were near record highs entering the week; the S&P 500 is up ~14% YTD after Friday’s close ^[2]. Investors are betting on further Fed rate cuts (futures imply ~40–50 bps more by Dec) despite resilient economic data ^[3].
Attention turned to Congress: without a funding deal by Tuesday midnight, a shutdown could begin Wednesday, delaying jobs and economic reports ^[4] ^[5]. President Trump met Congressional leaders Monday in a last-ditch bid to avoid a shutdown. Meanwhile, the Fed is expected to keep policy on hold next week but is likely to cut again later this year.
Gold hit a record high (∼$3,808/oz) as cautious investors bought safety, while oil prices eased near $70/barrel on reports of an OPEC+ production increase ^[6]. Image: A trading-screen display on the NYSE floor, Sept 2025. Markets were calm as investors awaited key data and policy news ^[7] ^[8].
Company News: Stellantis (NYSE: STLA) appointed Joao Laranjo as new CFO, taking over duties on Sept. 29 ^[9]. AstraZeneca (NYSE: AZN) announced it will list its ordinary shares directly on the NYSE, lifting its stock ~1.3% ^[10]. U.S. auto parts supplier First Brands Group filed for Chapter 11 protection Monday; lenders including Jefferies (NYSE: JEF) are heavily exposed to its debt ^[11].
Sector Highlights: Drugmakers and healthcare saw moves – GSK (LSE: GSK) surged 3.3% after its CEO announced a January exit, and AZN’s listing news boosted pharma sentiment ^[12]. Defense and industrial stocks rose on fiscal stimulus hopes, in line with analysts’ notes that asset managers are shifting from pure AI bets into infrastructure, energy and defense ^[13]. Conversely, U.S. medtech shares had fallen late last week after a Commerce Dept. probe on medical-device imports ^[14].
Macro & Fed Outlook: Economic indicators remained mixed. August U.S. job growth came in weak, yet core inflation is still sticky, prompting Fed officials to call policy “challenging” ^[15]. Traders trimmed some of their aggressive Fed-cut bets as the economy shows resilience. Fed speakers this week (NY Fed’s Williams, others) and Friday’s jobs report loom large. A successful funding bill or shutdown resolution could ease volatility, while a shutdown might temporarily delay data releases (e.g. payrolls) ^[16].
Analyst Commentary: With stocks near all-time highs, several strategists urge caution. “I do get a little bit more nervous…any kind of unexpected hiccup could cause a near-term dislocation,” says Ameriprise strategist Anthony Saglimbene ^[17]. UBS CIO Mark Haefele notes investors have “underestimated” the impact of massive fiscal stimulus, and are now re-allocating into sectors like infrastructure, power and healthcare ^[18]. Generali’s Antonio Cavarero adds that “fiscal stimulus is always a big element” in market performance ^[19]. These voices highlight that after a steep rally, stocks may need fresh catalysts amid uncertainties.
Next Steps: U.S. markets will watch the outcome of Monday’s funding talks, speeches by Fed officials, and the government’s fiscal health. Tuesday’s pre-market action may hinge on any overnight developments (e.g. Asian data or a shutdown update). Analysts note that historically the fourth quarter has been bullish (Nasdaq +6% on average), but stress that geopolitical and policy risks (tariffs on trucks/pharma take effect Wed ^[20], elections coming) could spark swings.

Sources: Reuters, CNBC, Bloomberg, company filings ^[21] ^[22] ^[23] ^[24] ^[25] ^[26] ^[27].

Fed rate cuts: What Wall Street is watching for

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Wall Street Braces for Shutdown: Stocks Rally as Fed Cuts Loom – Tech & Defense in Focus

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