Stocks tick higher on 1st day of government shutdown
Matteo Colombo/Getty Images
(NEW YORK) — Stocks ticked higher in midday trading on Wednesday, just hours after a government shutdown began, defying fears among some observers about the economic risk posed by a potentially prolonged impasse.
The Dow Jones Industrial Average jumped 71 points, or 0.15%, while the S&P 500 jumped 0.1%. The tech-heavy Nasdaq increased 0.1%.
The uptick extended a period of resilient performance for markets, which shrugged off the looming impasse a day earlier. Each of the major indexes ticked up on Tuesday, including a record high for the Dow.
The shutdown coincides with a rough patch for the U.S. economy, at least by some key metrics. A recent hiring slowdown has stoked recession fears, while inflation has proven difficult to fully contain.
Fresh hiring data on Wednesday morning deepened concern about the labor market. Private sector employment declined by 32,000 jobs in September, registering well short of economists’ expectations of 45,000 jobs added, according to data firm ADP research.
A government shutdown typically risks only modest damage for the U.S. economy, stemming mainly from furloughed public workers, who temporarily lose out on pay and put a dent in U.S. consumer spending, analysts previously told ABC News.
The impact of a shutdown could be more significant this time around, however, since the wobbly economy may strain under the weight of a potentially prolonged interruption, while a halt in the release of key economic data could make it more difficult for policymakers to steer the economy, they added.
This is a developing story. Please check back for updates.
President of the European Commission Ursula von der Leyen meets with U.S. President Donald Trump at Trump Turnberry golf club on July 27, 2025 in Turnberry, Scotland. Andrew Harnik/Getty Images
(NEW YORK) — The United States and European Union on Thursday released new details of their trade agreement, including tariff levels for consumer staples like pharmaceuticals and autos.
Prior to the agreement last month, the European Union faced the prospect of a 30% tariff rate. Instead, products from one of the largest U.S. trade partners will be slapped with a 15% tariff.
In exchange, the EU will remove tariffs on U.S. goods and European companies will aim to buy hundreds of billions of dollars in U.S. products.
“This Framework Agreement will put our trade and investment relationship – one of the largest in the world – on a solid footing and will reinvigorate our economies’ reindustrialization,” the U.S. and EU said in a joint statement on Thursday.
The fresh information about product-specific levies and additional European commitments holds implications for consumers and businesses across a wide swathe of the U.S. economy.
The European Union purchased about $370 billion worth of U.S. products in 2024, while the U.S. bought about $605 billion worth of European goods, according to the Office of the U.S. Trade Representative, a government agency. The U.S. conducts a greater amount of annual trade with the EU than any individual country.
Here’s what to know about the U.S.-EU framework agreement released on Thursday:
First off, the accord officially establishes a 15% tariff rate for pharmaceuticals from the EU, a top source of U.S. drug imports. Generic pharmaceuticals will be exempt from the new agreement, meaning such drugs will face a roughly 2.5% tariff rate in place prior to the Trump administration.
The move ruled out the possibility of a higher tariff rate for pharmaceuticals, for which Trump had previously threatened levies as high as 250%. The new tariffs will take effect on Sept. 1, the joint framework said.
Still, price hikes will likely hit pharmaceuticals, Jason Miller, a professor of supply chain management at Michigan State University, previously told ABC News. Pharmaceuticals account for roughly a quarter of U.S. imports from the EU as measured by total value, Miller said.
Semiconductors will also face a 15% U.S. tariff under the terms of the agreement, putting the levy well below a 300% rate previously threatened by Trump. Alcohol products, which went unmentioned in the new framework, also appear set for a 15% tariff rate.
The new agreement also includes a mechanism that would reduce the auto tariffs faced by European carmakers. Under the plan, the U.S. will reduce the tariffs on vehicles and auto parts from 27.5% to 15%, as long as the EU puts forward legislation that will slash its industrial tariffs.
The provision made up a key priority for Brussels. More than one in five European car exports is bound for the U.S., the European Automobile Manufacturers’ Association said in March. The lowered auto tariff could help ease upward pressure on car prices in the U.S.
In exchange for the tariff relief, the EU said it would remove tariffs on U.S. imports and urge companies to buy hundreds of billions of dollars in U.S. goods.
The EU will eliminate tariffs on all U.S. industrial products and provide preferential market access to U.S. producers of seafood and agricultural goods, the joint U.S.-EU statement said.
European companies “intend to procure” $750 billion worth of U.S.-made energy-related goods over three years. Also, the EU “intends to purchase at least” $40 billion worth of U.S.-made artificial intelligence chips for its computing centers, the statement said.
European firms intend to invest an extra $600 billion “across strategic sectors” in the U.S over the three years, the statement said.
The new framework may not be the final say on trade between the two sides. According to the joint statement, the accord amounts to a “first step in a process that can be expanded over time.”
(NEW YORK) — Hiring slowed in July as President Donald Trump’s tariffs pinched the balance sheets of some major companies and reshaped the nation’s trade relationships. The reading fell short of economists’ expectations.
The U.S. added 73,000 jobs in July, according to data from the U.S. Bureau of Labor Statistics, or BLS. That figured marked a slowdown from 147,000 jobs added in the previous month. The unemployment rate ticked up to 4.2%, keeping it at near-historic lows.
The report also provided new estimates for two previous months, significantly dropping the government’s estimate of jobs added in May and June. In May, the U.S. added 19,000 jobs, much lower than a previously estimated total of 139,000 jobs, the BLS said. While in June, the economy added just 14,000 jobs, revising downward a previous estimate of 147,000 jobs.
The fresh jobs data indicated a notable slowdown in hiring as Trump’s tariffs took hold over recent months.
“Not only was this a much weaker than forecast payrolls number, the monster downward revisions to the past two months inflicts a major blow to the picture of labor market robustness,” Seema Shah, chief global strategist at Principal Asset Management, told ABC News in a statement.
The jobs report arrives days after a separate government report showed better-than-expected economic growth. U.S. GDP increased at a 3% annualized rate over three months ending in June, the report said.
The robust reading suggested the economy has continued to avert a significant tariff-induced cooldown. A one-off statistical quirk tied to a drop-off of imports appeared to partially account for the surge, however.
Some key measures of the economy have proven resilient in recent months, defying fears of resurgent inflation and a possible economic downturn. Inflation has increased for two consecutive months but it remains well below a peak attained in June 2022.
The hiring data arrives days after the Federal Reserve opted to hold interest rates steady at its July meeting.
Five meetings and seven months have elapsed since the Fed last adjusted interest rates. The federal funds rate stands between 4.25% and 4.5%, preserving much of a sharp increase imposed in response to a pandemic-era bout of inflation.
A meaningful slowdown in the labor market could prompt the Fed to grant greater consideration to a potential rate cut.
Trump has repeatedly urged the central bank to lower interest rates, saying the policy would boost economic performance and reduce interest payments on government debt.
Fed Chair Jerome Powell, by contrast, has voiced some concern about a rekindling of inflation due to elevated tariffs. Importers typically pass along a share of the higher tax burden in the form of price hikes.
Speaking at a press conference in Washington, D.C., on Wednesday, Powell said tariffs had begun to contribute to price increases for some goods but the ultimate impact of the policy remains uncertain.
“Higher tariffs have begun to show through more clearly into prices of some goods but their overall effects on inflation and the economy remain to be seen,” Powell said. “Their effects on inflation could prove to be short-lived, but it is possible the inflation effects could be more persistent.”
He added, “We’ll do what we need to do to keep inflation under control.”
Co-founder and chief executive officer of Nvidia Corp., Jensen Huang attends the 9th edition of the VivaTech trade show at the Parc des Expositions de la Porte de Versailles on June 11, 2025, in Paris. (Chesnot/Getty Images, FILE)
(NEW YORK) — Chip giant Nvidia delivered more revenue than expected over a recent three-month period, the company said on Wednesday, defying concern among some prominent figures about a possible bubble in the artificial intelligence industry.
The California-based company recorded $46.7 billion in sales over three months ending in July, which exceeded analyst expectations of $46.2 billion. The jump in revenue marked 56% growth compared to the same quarter a year earlier.
The fresh data offered the latest window into the health of the artificial intelligence (AI) industry, which in recent years has become a key engine for stock market gains and economic growth.
Nvidia, the $4 trillion company behind many of the chips fueling AI products, has expanded at a breakneck pace since an AI boom set off by the release of OpenAI’s ChatGPT in 2022. The California-based company saw its stock price soar nearly 700% over the ensuing two years.
Alongside continued growth, the company is weathering new challenges. President Donald Trump barred the sale of chips to China earlier this year, before revoking the ban in July. A month later, Trump struck an agreement with Nvidia allowing the company to sell chips in China if the firm hands over 15% of revenue generated by the exports to the U.S.
Speaking at the White House earlier this month, the president recounted the agreement with Nvidia.
“I said, ‘If I’m going to do that, I want you to pay us as a country something, because I’m giving you a release,'” Trump said.
In May, the company said it expected to suffer an $8 billion loss as result of restrictions imposed upon chip exports. Earnings released on Wednesday said the company did not sell any H20 chips in China over the most recent quarter, but the firm did not mention any losses related to the policy.
In recent weeks, some prominent figures have warned of an AI bubble, casting doubt on the sustainability of the sector’s gangbusters growth. Torsten Sløk, chief economist at Apollo, said last month that the AI bubble may exceed the dot-com bubble of the 1990s, suggesting that the top firms are overvalued.
In an interview earlier this month, OpenAI CEO Sam Altman also said the AI industry had become a bubble.
“Are we in a phase where investors as a whole are overexcited about AI? My opinion is yes. Is AI the most important thing to happen in a very long time? My opinion is also yes,” Altman told tech publication The Verge.
Still, the AI sector remains a bright spot for the U.S. economy. AI-related spending added a 0.5 percentage point boost to annualized gross domestic product growth over the first half of 2025, Pantheon Macroeconomics found.
