Well, well, well. Here we are again, folks. The government has officially gone dark, and if you’re wondering what that means for your investment portfolio, grab a coffee because we need to talk.
As of Tuesday night, Washington couldn’t get its act together (shocking, I know), and now we’re in full shutdown mode. But before you start panic-selling everything, let’s break down what’s actually happening in the markets and why your portfolio might be feeling a little queasy today.
The Stock Market’s Having a Moment
Surprise! Stocks don’t love uncertainty. Who could have predicted that? As markets opened Wednesday morning, here’s what the scoreboard looked like:
- S&P 500: Down 0.42% (because apparently even the market needs a breather)
- Dow Jones: Down a modest 0.09% (the old-timer’s holding steady)
- Nasdaq: Down 0.62% (tech stocks are having their usual dramatic reaction)
Glen Smith from GDS Wealth Management put it perfectly: “The government shutdown is another brick in the stock market’s wall of worry.” And honestly, that wall is getting pretty tall these days with high valuations and September’s surprisingly strong performance making everyone a bit nervous.
Bonds Are Playing It Cool
While stocks are doing their anxious dance, bonds are basically that friend who stays calm during a crisis. The 10-year Treasury yield dropped just 1 basis point to 4.137%. Translation: Bond investors are saying “meh, we’ve seen this movie before.”
Here’s the kicker though – we also got some spicy employment data that has everyone talking. Private employers actually shed 32,000 jobs in September. That’s not a typo. It’s the biggest decline in over two years and way worse than the 40,000 gain economists were expecting. Yikes.
But here’s where it gets interesting: bad job news might actually be good news for rate cuts. The Fed’s looking at nearly 100% odds of another 25 basis point cut when they meet on October 29. Sometimes the market works in mysterious ways.
Gold is Having Its Main Character Moment
Remember when your grandparents told you to buy gold? Well, they’re looking pretty smart right now. Gold hit a fresh record high of $3,898.18 an ounce, up nearly 1% in early trading. That’s a whopping 46% gain from the start of the year.
When everything else feels uncertain, investors flock to gold like it’s the last slice of pizza at a college party. It’s the ultimate “safe haven” asset, and right now, it’s absolutely having its moment.
The Real Talk: Should You Panic?
Here’s the thing about government shutdowns – they’re like that dramatic friend who threatens to leave the party but always comes back. History shows us that market moves during shutdowns are typically short-lived. Goldman Sachs economists noted that sharp moves in Treasury yields and the dollar usually reverse once shutdowns end.
Vanguard put it best: “Although there can be market volatility during a shutdown, history reveals no clear relationship between shutdowns and market returns.”
The bigger concern isn’t really the shutdown itself – it’s what comes next. Will this drag on? Will there be mass federal worker firings as Trump has threatened? These are the questions keeping investors up at night, especially when consumer spending is already under pressure.
Oh, and here’s a fun bonus: we might not get the September jobs report on Friday because the Bureau of Labor Statistics is part of the shutdown. So we’re flying blind on some key economic data. Cool, cool, cool.
The Bottom Line
Look, government shutdowns are never fun, but they’re also not usually market apocalypses. The fundamentals are still there – corporate earnings are solid, the Fed is cutting rates, and the overall economic backdrop remains relatively positive.
As Glen Smith noted, any volatility from the shutdown might actually be an opportunity for investors with strong stomachs and long-term perspectives. Just maybe don’t check your portfolio every five minutes today. Your stress levels (and your portfolio) will thank you.
Stay calm, stay diversified, and remember – this too shall pass. Probably.