In the latest episode of Take 5, hosts Ryan Detrick, Chief Market Strategist, and Sonu Varghese, VP, Global Macros Strategist, dive into the latest government shutdown and what it means for the markets and the economy. While shutdowns grab headlines, history shows their long-term impact on stocks is limited. Instead, factors like Federal Reserve policy, market momentum, and seasonal patterns are likely to play bigger roles as we head into Q4 2025.
Key Takeaways
- Government Shutdown Context: This marks the first shutdown since late 2018/early 2019. Historically, most shutdowns have had little to no lasting impact on markets.
- Market Impact: While shutdowns can delay government data releases (like jobs and inflation reports), the economy tends to rebound once they’re resolved.
- Historical Performance: The S&P 500 has risen on average during past shutdowns—including a 10% gain during the 34-day shutdown in 2018-19.
- Fed Policy Matters More: The Federal Reserve’s rate-cutting cycle is a much bigger driver for markets than short-term political dysfunction.
