Here’s How Government Shutdowns Have Impacted The Stock Market—And Why A Debt Limit Showdown Could Be Much Worse

Here’s How Government Shutdowns Have Impacted The Stock Market—And Why A Debt Limit Showdown Could Be Much Worse

Share to Linkedin With a potential government shutdown and debt limit showdown both looming in the days and weeks ahead, investors are growing concerned about how uncertainty in Washington could spill over into the market, and though stocks have only posted small returns during past shutdowns, experts agree the United States' first debt default in history could be much worse—especially for government-exposed stocks. A growing number of experts are warning the debt ceiling debate in Washington looks riskier than ... [+] usual. In the 14 government shutdowns since 1980, stocks have posted "very small" returns leading up to and during government shutdowns, generating median losses of 0. 1% on days the budget authority expires—which would happen Thursday if lawmakers don't strike a deal—and staying virtually flat throughout the shutdown periods, Goldman Sachs reported in a Tuesday note. However, the last shutdown in December 2018 was a "notable exception," the analysts wrote, pointing out concerns over monetary policy helped push the S&P 500 down 2% and noting the underlying environment has historically been "more important" for stock-market performance. Hardest hit industries have been information technology—including tech giants like Apple, Microsoft and Intel—as well as energy stocks, which tend to outperform during