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United States Government Partial Shutdown Effect to Stock Market

Last December 22, the United States government partially shut down because of the Congress’s non-agreeable deal to fund which will keep it open. The main pinpoint was President Donald Trump’s persistence to fund a bill with a $5 billion for a wall border between the United States and Mexico. That is where the Congressional Democrats being the majority in the White House, forcibly refused.

Weeks before the shutdown was brutal for the stock markets when Nasdaq fell towards a bear market. Even the Dow Jones Industrial Average (DJIA) and S&P 500 falls deep close towards the bearish market. This partial shutdown isn’t the main reason for stocks to fall, yet with the recent volatility rate, it wasn’t a big help either.

Around four hundred workers aren’t getting paid until a resolution is final. A lot of government servicing closed including parts of the Internal Revenue Service (IRS) and the Securities and Exchange Commission (SEC). But other financial regulators servicing opens to lessen the impact on the market operation.

United States Government Services Shutdown Effect to Stock Market

On January 20 of the same year, the United States government shuts down after Congress failed to pass a bill to fund the government throughout February. The market saw this shutting down scenario would occur. That resulted in the S&P 500 to rose around 0.4% last Friday.

Well, you might get confused about the word “rose” in the last part. It turns out that the stock market isn’t that bothered with the federal partial shutdowns. After that weekend (Jan. 20), the market opening on Monday morning (Jan. 22) had a market rise of 0.8%. That market rise had less connection to the Congress report that they would temporarily provide a fund to the government (bill signed evening of Jan 22).

Those shutdowns aren’t that new for the stock market. LPL has chomped the figures from the previous shutdowns since 1976 to 2013, discovering that the median change for the S&P 500 on those shutdowns was 0.0%.

But never get the theory that such budget jestings don’t matter. After the bitter conquer on the debt ceiling during 2011, the S&P downgrades the U.S. sovereign debt to lecture a gridlock to Congress without an apparent will to solve the deficit. That time S&P falls down 6.7% on the following trading days.

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