The past three days of the internet/tv/social media have been consumed with coverage of the government shutdown. So, it only seems natural that the talking heads on CNBC get in on the action, by landing an exclusive interview with President Obama (see complete interview here). Right now, the main concerns are children not getting medical treatment, The FDA not being able to oversee the food that were eating, and not having available data from the CDC on diseases and viruses in your area.
From an investment standpoint, the question on everyone’s mind is, will the stock market take a hit?
The natural conclusion could be that investors will pull out their money based on uncertainty of when a compromise will be made. But is that the truth or just the perception based on past shutdowns? After all this isn’t an unprecedented event.
Disclaimer: (Past performance is not necessarily indicative of futures results)
Table Courtesy: Paststat
These are the returns of the S&P 500 after every government shutdown dating back to the 1970’s. As it turns out, out of the eight trading days, six of the eight showed a positive return, with an average gain of .73%.
So can we expect the same in this shutdown? Today is day three of the shutdown and since the close of Monday (looming day before shutdown) the S&P 500 is actually even. (past performance is not necessarily indicative of future results).
The only difference this time around, is Congress also has to raise the debt ceiling in a couple weeks. Both of these happening at the same time is an unprecedented event. There have already been reports that congress will try to push the budget and the debt ceiling into one bill, but with uncertainly of it passing, things could get messy.
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