U.S. stock futures dropped in Asian trade on Friday, following a rejected spending bill backed by President-elect Donald Trump, raising the prospect of a government shutdown.
The Dow Jones futures fell 0.4%, reaching 5,912.50 points, while the S&P 500 futures declined 0.5%, standing at 21,263.0 points. The Nasdaq futures slipped 0.3%, to 42,661.0 points. The futures extended their losses after a slight drop in Thursday evening trading.
The bill, which had been hastily assembled by policymakers to accommodate Trump’s demands for increased government spending and a raised debt ceiling, was voted down in a 174-235 decision by the House of Representatives. This rejection occurred even after Trump and several Republican senators expressed opposition to the previous bipartisan deal.
The government funding deadline is fast approaching, with expiration set for midnight on Friday, potentially marking the start of a partial government shutdown. The shutdown could disrupt a variety of operations, including border security and travel services, which is expected to have a particularly significant impact during the busy holiday season.
Trump and Tesla CEO Elon Musk had criticized provisions in the previous bill, which they deemed excessive, particularly the parts perceived as wasteful giveaways to Democrats. The newly proposed bill removed some of these controversial provisions, such as increases to lawmaker pay, and incorporated Trump’s demand for a two-year limit on national debt, a move aimed at easing the passage of his promised tax cuts.
The looming government shutdown adds a layer of uncertainty to Wall Street, already under pressure from earlier losses this week. The Federal Reserve had recently cut interest rates but indicated that future rate cuts would occur at a slower pace in 2025, further weighing on market sentiment.
In addition to the political developments, market participants are also awaiting key economic data for November, including the U.S. Federal Reserve’s preferred inflation gauge, which could significantly influence the future outlook for interest rates.
