The S&P 500 closed flat on Friday, but ended the week in the green as concerns about the impact of a government shutdown were largely brushed aside.
At 4:00 p.m. ET (20:00 GMT), the Dow Jones Industrial Average gained 238 points, or 0.5%, the S&P 500 index was flat, and the NASDAQ Composite closed 0.3% lower. All three major averages had hit record highs intraday.
Government shutdown could hit economy
Treasury Secretary Scott Bessent warned in a CNBC interview on Thursday that this shutdown could hurt the economy more than those in the past.
Shutdowns have historically had limited impact on financial markets and the economy. The last shutdown occurred during Trump’s first term, and lasted 35 days between late-2018 and early-2019. The Congressional Budget Office estimated an impact of $11 billion on the economy from the shutdown, which was also the longest in U.S. history.
A cooling U.S. labor market is a "bigger worry" for financial markets than an ongoing U.S. government shutdown, according to analysts at Capital Economics.
Writing in a note to clients, the analysts led by Jonas Goltermann suggested that, historically, a shutdown of the federal government is "unlikely to make much impact" on investors even if "it drags on for some time."
Instead, a softening in the labor picture points to "downside risks" for a range of asset classes, including equities, U.S. Treasury yields and the dollar, they argued.
