Dow Jones futures struggle as US government shutdown continues

• Dow Jones futures decline as traders adopt caution amid ongoing US government shutdown.
• The White House backed Trump's warning that job losses could occur as the government shutdown showed signs of continuing.
• Wall Street may draw support from AI-related deal activity.

Dow Jones futures edge down by 0.24% to trade below 46,850 during European hours on Tuesday, ahead of the regular session opening in the United States (US). The S&P 500 futures decline 0.13% to remain below 6,800, while Nasdaq 100 futures fall 0.11% to trade around 25,150.

US index futures lose ground as market sentiment weakens amid continuing United States (US) government shutdown. The White House supported the claim made by the US President Donald Trump's on Monday that government employees were already being laid off due to the shutdown but cautioned that job losses could occur as the shutdown appeared likely to continue. Meanwhile, the Republican-led Senate rejected competing funding measures for federal agencies for the fifth time.

US stock markets may gain ground as traders expect the US Federal Reserve (Fed) to deliver further rate cuts by the end of the year. The CME FedWatch Tool suggests that markets are now pricing in a 94% chance of a Fed rate cut in October and an 84% possibility of another reduction in December.

Additionally, the US government shutdown has postponed the key economic data release, including September's Nonfarm Payrolls report. The alternative jobs data like ADP Employment Change and Job Openings indicate a weakening labor market, which strengthens expectations of an imminent rate cut.

On Monday's regular session, Wall Street started the week with a mixed performance, with the Dow Jones fell 0.14%, while the S&P 500 and Nasdaq Composite rose 0.36% and 0.71%, respectively, to record fresh highs. Gains were fueled by AI-related deal activity, as AMD surged 23.7% following the announcement of a multiyear agreement to supply AI chips to OpenAI, which may acquire up to a 10% stake in the company.