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\n \n Energy and real estate sectors have typically emerged as top performers during past shutdowns, while technology and utilities have lagged behind. However, it\u2019s important to note that the average gains during these five shutdowns are significantly influenced by the late 2018 and early 2019 period, when the S&P 500 surged more than 10%. This particular shutdown coincided with a dovish pivot from the Federal Reserve, which further supported equity markets.\n <\/p>\n \n The current funding dispute, however, is raising alarms in some circles. Karthik Nagalingam, a U.S. credit strategist at Deutsche Bank Research, recently pointed out that the economic conditions surrounding this shutdown are the weakest since 1990. He warned that a prolonged government shutdown could exacerbate existing pressures. “A sustained government shutdown could further dampen consumer sentiment, slow growth, and impact how rating agencies view U.S. fiscal concerns going forward,” Nagalingam stated.\n <\/p>\n \n He further elaborated, “Unlike in President Trump’s first term, the economic backdrop is much weaker entering this potential shutdown fight, with a labor market that has been weakening over the last six months at the fastest rate since 2007, outside of the pandemic.” This suggests that any negative shock could have more severe repercussions this time around.\n <\/p>\n \n The rising tensions between the two political parties also contribute to increased uncertainty in the stock market. Democrats appear unlikely to compromise on their demands regarding healthcare funding. Mills from Raymond James commented on the situation, stating that both parties seem entrenched in their positions, making it less likely for either side to back down. “The odds of a shutdown are rising, given both sides are entrenched and a general lack of compromise on the issues,” Mills noted.\n <\/p>\n \n He added, “As a result, we expect increased market volatility, reflecting the rising headline risk as negotiations intensify, but … our base case remains a short Continuing Resolution followed by a major battle in November.”\n <\/p>\n \n For now, a critical area to monitor is whether House Republicans can advance a bill without relying on Democratic votes\u2014a scenario that could significantly influence the resolution path.\n <\/p>\n<\/p><\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":" The stock market has historically shown resilience during government shutdowns, but the current contentious congressional debate over the latest funding bill may challenge that trend. As the government shut down overnight on Wednesday, the stock market reacted negatively, a departure from its usual behavior during such events. Historically, the stock market has tended to overlook […]<\/p>\n","protected":false},"author":1,"featured_media":2266,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[28],"tags":[],"class_list":["post-2265","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing"],"_links":{"self":[{"href":"https:\/\/igorsplayground.com\/appcheckr\/wp-json\/wp\/v2\/posts\/2265","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/igorsplayground.com\/appcheckr\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/igorsplayground.com\/appcheckr\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/igorsplayground.com\/appcheckr\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/igorsplayground.com\/appcheckr\/wp-json\/wp\/v2\/comments?post=2265"}],"version-history":[{"count":0,"href":"https:\/\/igorsplayground.com\/appcheckr\/wp-json\/wp\/v2\/posts\/2265\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/igorsplayground.com\/appcheckr\/wp-json\/wp\/v2\/media\/2266"}],"wp:attachment":[{"href":"https:\/\/igorsplayground.com\/appcheckr\/wp-json\/wp\/v2\/media?parent=2265"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/igorsplayground.com\/appcheckr\/wp-json\/wp\/v2\/categories?post=2265"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/igorsplayground.com\/appcheckr\/wp-json\/wp\/v2\/tags?post=2265"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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\n The stock market has historically shown resilience during government shutdowns, but the current contentious congressional debate over the latest funding bill may challenge that trend. As the government shut down overnight on Wednesday, the stock market reacted negatively, a departure from its usual behavior during such events.
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\n Historically, the stock market has tended to overlook funding disputes. According to research from Raymond James, stocks have actually risen during five previous government shutdowns, with the S&P 500, MidCap 400, and Small Cap 600 all gaining approximately 3% during those periods. Ed Mills, a Washington policy analyst at Raymond James, noted last Wednesday, “Overall equity index performance has been positive in most funding gaps, suggesting little evidence that a funding gap is a rational risk to equity performance (at least historically!).”\n <\/p>\n