Dow, S&P 500, Nasdaq Down as Government Shutdown Nears; Wolfspeed Stock, Tesla, Intel, Nvidia, Boeing and More Movers
Stocks were trading sideways on Tuesday as the clock ticked on Congress to reach a deal to forestall a government shutdown.
The Dow was down 64 points, or 0.1%. The S&P 500 was flat. The Nasdaq Composite was down 0.1%. All three have moved in and out of positive territory throughout the session.
A government shutdown would begin at midnight ET if lawmakers can’t reach an agreement on funding.
The Congressional Budget Office said Tuesday it estimates about a third of the federal workforce could be furloughed without pay in the case of a government shutdown. That amounts to $400 million a day. Such employees would get back pay whenever funding returns.
22V Research’s Dennis DeBusschere writes that investors he’s talking to have been asking about odds of an extended shutdown.
“Most assume a one- or two-day shutdown is a given,” DeBusschere writes.
The S&P 500 has averaged a gain of 0.05% during past government shutdowns back to 1976. During the shutdown that began in December 2018 and ended in early 2019, it rose 10.3%, though dovish comments from Federal Reserve Chairman Jerome Powell sparked that rally.
“This would have several market implications, including a delay to Friday’s US jobs report, so we might end up flying blind for some time on the economic data,” writes Jim Reid, head of macro and thematic research at Deutsche Bank. “But, despite all the market attention on a shutdown, historically shutdowns haven’t had a negative impact on major financial assets.”
The last time the S&P 500 fell during a government shutdown was in 1990: It fell 2.1% in 1990 between Oct. 5 and Oct. 9 of that year.
