The U.S. government shutdown is starting to impact the American economy, Treasury Secretary Scott Bessent warned on Monday.
Federal funding cut-offs have begun to hit the country's real economy and people's lives, the Treasury chief said during an interview with Fox Business Network as the shutdown entered the 13th day.
On Saturday, U.S. President Donald Trump directed the Pentagon to use all available funds to ensure U.S. military service members receive paychecks during the shutdown.
However, it means that the government now has to hold back on payments to other federal workers and services, according to Bessent.
He also reiterated that the shutdown was stalling U.S. aid for farmers.
U.S. Republican House Speaker Mike Johnson warned on Monday that the federal government shutdown may become the longest in history.
Democratic House Leader Hakeem Jeffries has said Democrats are ready to sit down and have a conversation with Republicans to find a bipartisan solution, but such discussions have not been taking place thus far.
The impact of the federal government shutdown continues to spread across the country. U.S. media reports showed that a shortage of air traffic controllers has been causing more flight delays. Nearly 8,000 flights were reportedly delayed and more than 270 canceled on Sunday alone across the country.
Government shutdown beginning to hit economy: Treasury Secretary
U.S. stocks closed mixed on Monday as a sharp sell-off in semiconductor equities dragged down the technology sector, while investors digested new U.S. economic sanctions announced against Iran and fresh trade tariff warnings targeting Canada.
The Dow Jones Industrial Average rose 140.15 points, or 0.26 percent, to 53,417.16. The S and P 500 sank 21.51 points, or 0.28 percent, to 7,652.86. The Nasdaq Composite Index shed 200.264 points, or 0.77 percent, to 25,980.19.
Eight of the 11 primary S and P 500 sectors ended in the green, with consumer staples and financials leading the gainers by going up 1.76 percent and 1.24 percent, respectively. Meanwhile, technology and energy led the laggards by losing 1.59 percent and 0.76 percent, respectively.
The tech sector's pullback stemmed from broad weakness across chipmakers. Memory and semiconductor shares came under heavy pressure following weekend reports that graphics processor leader Nvidia plans to implement price hikes across select AI server configurations. SanDisk, Western Digital, SK Hynix, Micron Technology and Seagate Technology all finished lower.
Geopolitical developments dominated macroeconomic headlines as U.S. Treasury Secretary Scott Bessent on Monday threatened Iran with "an economic D-Day," announcing a wave of new sanctions aimed at further isolating the country.
On the trade front, U.S. President Donald Trump escalated trade frictions with Canada, announcing intentions to raise tariffs on Canadian cars, automotive parts and steel to 50 percent effective Jan. 1, 2027. The announcement weighed on domestic automotive equities, pulling shares of General Motors and Ford lower.
In corporate earnings disclosures, U.S.-listed shares of Chinese e-commerce firm PDD and electric vehicle maker XPeng declined 1.48 percent and 8.53 percent, respectively, following their latest quarterly financial reports.
Market attention is now converging on two critical catalysts later this week: Nvidia's highly anticipated second-quarter earnings release on Wednesday, expected to serve as a vital referendum on the ongoing AI investment cycle, and Federal Reserve Chair Kevin Warsh's scheduled address at the central bank's annual Jackson Hole Economic Policy Symposium.
U.S. stocks close mixed as chip stocks sink
