The government shut down this week. Even with the lack of an agreement, is the private sector poised to remain open for business?
Monday
S&P 500 0.26% | NASDAQ 0.48%
Markets are counting down to the government shutdown deadline as last Friday’s measure fell flat in the Senate. They did, however, see room to run as optimism about growth led the way. If a resolution is not made, markets could interpret that as status quo and not budge. On the contrary, they could see that as an opportunity to buy with hopes of less gridlock in Congress.
Tuesday
S&P 500 0.41% | NASDAQ 0.30%
The last day of trading for September pushed markets higher. The day was also data heavy as Job Openings increased against the backdrop of slowing consumer confidence. The deadline for funding the government ends at midnight with little indication of a resolution.
Wednesday
S&P 500 0.34% | NASDAQ 0.42%
The government funding deadline has passed, and the markets barely blinked. ADP Payroll processing released data that 32k jobs were cut in September. The recent interest rate cut has driven markets higher but jobs data will certainly be delayed with the government shutdown.
Thursday
S&P 500 0.06% | NASDAQ 0.39%
A flat trading day for the S&P500 as the government shutdown continued but it still ended at an all-time high. The Dow Jones Industrial and Nasdaq also closed at records with the latter benefiting from a strong advance from chipmakers.
Friday
S&P 500 0.01% | NASDAQ 0.28%
The week ended with noticeable gains. Friday’s Service industry announcement came close to contraction territory while prices edged higher in services.
Conclusion
S&P 500 1.09% | NASDAQ 1.32%
As markets are waiting for developments on Capitol Hill, there were gains made across the board for equities this week. A shutdown leaves little in the way of timely data release by the government. This may complicate things if the shutdown persists longer than “normal”. The average shutdown lasts about a week, so with the timeline unknown, markets appeared to disregard that uncertainty for now. The longest shutdown in U.S. history lasted 35 days which was back in 2018. The fact that all indices reached all-time highs shows an appetite for risk in the face of unresolved fiscal policy. If the shutdown goes longer than expected, markets may decide to tone down on risk. The promise of political division will remain, but continued growth is not exactly guaranteed. It will be a matter of whether the economy is still open (or closed) for business.
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