Wall Street stocks rose again on Wednesday, shrugging off the partial US government shutdown, as major indices finished at records amid hopes for more Federal Reserve interest rate cuts.

Both the Dow and S&P 500 closed at fresh records as investors focused on poor US employment data, which boosted expectations that the Fed could cut interest rates later this month.

US government operations began grinding to a halt at 12:01 am (0401 GMT) on Wednesday after Republicans and Democrats failed to break a budget impasse in Congress.

The closure will see non-essential operations halted, leaving hundreds of thousands of civil servants temporarily unpaid, and many social safety net benefit payments potentially disrupted.

But analysts note that shutdowns have not significantly weighed on markets due in part to the view that the negative impacts from closures can be reversed once the government reopens.

"History reminds us that government shutdowns have typically been more headline-making than bottom-line impacting," said CFRA Research's Sam Stovall.

Investors took note of a report from payroll firm ADP that showed the US private sector shed 32,000 jobs last month.

"The market's getting a little bit excited that this is something where the Fed can continue cutting interest rates," said Tim Urbanowicz, chief investment strategist at Innovator Capital Management. "There's this kind of middle ground where the data is not showing a lot of strength, but it's not weak enough where people start getting concerned about recession."

Analysts said the weaker job market cements expectations that the Fed will cut interest rates twice more this year, after lowering borrowing costs last month for the first time since December.

But investors are concerned the US government shutdown could prevent the release on Friday of the key non-farm payrolls report – a crucial data point for the Fed on rate decisions. (AFP)