US stock futures drop as Trump-backed spending bill fails to pass
Investing.com– U.S. stock futures fell in Asian trade on Friday after a stop-gap spending bill backed by President-elect Donald Trump was voted down in Congress, raising the prospect of a government shutdown.
S&P 500 Futures fell 0.4% to 5,912.50 points, while Nasdaq 100 Futures fell 0.5% to 21,263.0 points by 22:10 ET (02:10 GMT). Dow Jones Futures fell 0.3% to 42,661.0 points. Futures extended losses after falling slightly in Thursday evening trade.
The bill was assembled at the eleventh hour by policymakers to include Trump’s demands for higher government spending and a raised debt ceiling. But the spending bill was rejected in a 174-235 vote in the House of Representatives, with several Republican senators also openly defying the President-elect.
The new bill replaced a bipartisan deal to approve government spending, after Trump and Tesla (NASDAQ:TSLA) CEO Elon Musk came out in opposition of the old deal.
Government funding is set to expire at midnight on Friday, marking the beginning of a partial government shutdown that could disrupt operations ranging from border security to travel. The disruption is expected to be particularly dire amid increased travel trends during the holiday season.
Trump and Musk had balked at several provisions in the older bill which they perceived as wasteful giveaways to the Democrats. The revised version of the bill had dropped some provisions to increase lawmaker pay, but on Trump’s demands, proposed limits on national debts for two years- a scenario that would make it easier to pass his promised tax cuts.
A government shutdown presents another layer of uncertainty for Wall Street, which was already nursing steep losses from earlier this week after the Federal Reserve cut interest rates but flagged a substantially slower pace of rate cuts in 2025.
Focus this Friday is also on key upcoming PCE price index data for November. The reading is the Fed’s preferred inflation gauge, and is likely to factor into the outlook for interest rates.