Like it or not the stalemate in Washington is still the 800 pound gorilla in the room as far as the market goes! The following should help you keep perspective as far as the relationship between the shutdown and your portfolio. Chart of The day has been tracking this with various charts over the last few weeks. so far the past has been prologue, which doesn’t guarantee the future but should calm your nerves if they need it.
Last week’s chart illustrated how the stock market tends to perform after a government shutdown begins. Today’s chart provides further perspective by focusing on how the stock market tends to perform after a government shutdown ends. Today’s chart plots the average S&P 500 performance for the 20 trading days (approximately one calendar month) before and 60 trading days (approximately 3 calendar months) after a government shutdown ends. As today’s chart illustrates, the stock market has tended to struggle prior to the end of a government shutdown due to the fact that investors fear the unknown. Following this, the stock market has (on average) trended higher over the ensuing three months in what amounts to a relief rally. It should be noted that today’s chart is an average performance chart and that following the last 17 shutdowns, the stock market traded up 60 trading days after a shutdown ended on 12 out of 17 occasions (i.e. 70.5%).