Government Shutdowns and the Stock Market: What History Tells Us

Past shutdowns show markets often shrug — context drives price more than politics.

Pretty sure you’re fed up of hearing about it…😁
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But let’s talk Government Shutdowns.
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Not just waffle, more specifically:​

  • What happened during past shutdowns?
  • How long did they last?
  • And what’s important to us… what the heck did the markets do?

GOVERNMENT SHUTDOWNS - CONTEXT CHECK

Ok, so here three recent examples:

🔹 1995–96 (Lasted for 21 days)
Clinton vs. Gingrich
📈 S&P 500: +3% during the shutdown
💡 Takeaway: Market shrugged it off. Strong economy, early tech boom.

🔹 2013 (Lasted for 16 days)
Fight over Obamacare
📈 S&P 500: +3% during the shutdown (after a brief wobble)
⚠️ VIX: Spiked into the mid-20s before a deal, then eased back.

🔹 2018–19 (Lasted for 35 days)
Trump’s border wall standoff
📈 S&P 500: Rallied >10% off the Christmas Eve lows
💡 Takeaway: Market was reacting to Powell’s Fed pivot… not shutdown news.

So… What matters?

Well, shutdowns get headlines. It all sounds scary, people click. 😱

But historically? The markets DGAF…

The real drivers?

  • The Fed
  • Macro conditions
  • Market context

So whilst it’s a wobbly start to Q4 on the futures this morning… history shows us that the shutdown is probably not the driver.

As always…context matters.