Dow Jones Industrial Average knocks lower as shutdown fears grow

• The Dow Jones backslid into the 46,500 region on Tuesday.
• Investors are waking up to the negative impacts of a government shutdown.
• Interest rate expectations and Fedspeak dominate market flows this week.

The Dow Jones Industrial Average (DJIA) knocked lower on Tuesday, following the broader market into the low side. Investors are reconsidering their disregard for the US government shutdown that has dragged into its second week and shows no signs of resolution.

The Dow kicked off Tuesday with a hard drop from overnight highs above 46,800, falling over 420 points top-to-bottom before finding an intraday floor of 46,430. The Dow equity index is now looking for a rebound after finding a technical floor near 46,500.

Oracle gives back some AI hype gains

After a firm surge on expectations of soaring AI-based revenue and joint projects, Oracle (ORCL) led the pack lower, falling after real-world estimates of profits from joint servicing ventures in the AI space fell well short of initial investor reactions. Oracle is generating much thinner profit margins on its cloud business than many expected, and is actually losing money on some of its chip rental schemes with Nvidia (NVDA). Oracle is down nearly 4.5% at the time of publication and has fallen below $280.00 per share.

Government shutdowns may impact some things after all

Investors have been brushing off the US federal government's shutdown last week, with markets confident that a quick resolution would be found and economic fallout would be minimal. That confidence may prove to have been misplaced, as both sides of the US Congress appear to be no closer to a budget solution than before the lockout began. Traders expected a budget solution to materialize on Monday, or at least some form of progress to have been made.

As the government shutdown rolls on, the Federal Reserve (Fed) will be grappling with a lack of key official datasets as it makes interest rate decisions heading into the tail end of the calendar year. Barring any significant shocks in the data that remains available to the Fed, rate markets have locked in expectations of two follow-up interest rate cuts on October 29 and December 10.

Dow Jones daily chart