With no full-year budget or stopgap funding deal in place, the U.S. government could shut down at 12:01 a.m. ET on October 1—but if you think the stock market is bracing for chaos, think again.
Betting markets now place the odds of a Wednesday government shutdown starting as high as 65%.
Looking at the last 11 U.S. government shutdowns, the S&P 500 – as tracked by the Vanguard S&P 500 ETF (NYSE: VOO) – actually posted gains in eight of them, rising an average of 1.46% across a seven-session window surrounding the events.
That’s a 72% win rate during periods when most headlines scream “catastrophic.”
How Have Stocks Reacted To Past Shutdowns?
The historical record is clear: shutdowns don’t always spook Wall Street.
Take the longest government shutdown in modern history, which ran from December 2018 to January 2019. During that stretch, the S&P 500 soared 11.92%, driven more by a rebound from oversold conditions than any fiscal alarm bells.
In October 2013, …