While the S&P 500 tends to trade lower during government shutdowns, around 70% of the time it is higher 60 days-post shutdown. That's not a guarantee of course, but the historic average favors recovery. ~ Ilene
Courtesy of Chart of the Day
Quote of the day: "Suppose you were an idiot, and suppose you were a member of Congress; but I repeat myself." – Mark Twain
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%).
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