scorecardUS stocks drop as investors weigh shutdown risks and tighter Fed
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US stocks drop as investors weigh shutdown risks and tighter Fed

Filip De Mott   

US stocks drop as investors weigh shutdown risks and tighter Fed
Stock Market1 min read
The Capitol building is seen through the American flags in Washington DC on October 20, 2022.    Jakub Porzycki/NurPhoto/Getty Images
  • Stock futures dropped Tuesday, extending September's market sell-off.
  • Federal Reserve hawkishness and the possibility of a US shutdown are adding downside pressure.

Stocks fell Tuesday morning, extending this month's market downturn and canceling out most of Monday's gains.

Among headwinds traders are assessing is the expectation of tighter monetary policy, after the Federal Reserve indicated chances of another rate hike this year.

While two rate cuts are expected in 2024, Minneapolis Fed President Neel Kashkari said Monday that the central bank may need to hold interest rates at higher levels given strength in the US economy.

Meanwhile, JPMorgan's Jamie Dimon floated the possibility of 7% interest rates, citing inflationary pressures, and warned that many may not be prepared for what rates at that level could mean for the economy.

With the Fed remaining hawkish, investors have had to contend with surging bond yields, though Treasury sell-off cooled on Tuesday.

Meanwhile, a looming US government shutdown is also fueling market uncertainty. Equities would take an immediate hit if Congressional leaders do not agree on a spending bill before October 1.

Here's where US indexes stood shortly after the 9:30 a.m. opening bell on Tuesday:

Here's what else is going on today:

In commodities, bonds, and crypto:

  • West Texas Intermediate crude oil inched lower to $89.60 a barrel. Brent crude, the international benchmark, slipped 0.1% to $93.17 a barrel.
  • Gold slipped 0.7% to $1,923.20.
  • The yield on the 10-year Treasury bond dipped one basis point to 4.529%.
  • Bitcoin stayed essentially flat at $26,217.



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