What government shutdown? Wall Street shrugs off D.C. turmoil – for now. (+video)
The federal government has shut its doors 17 times previously in the past 40 years, the most recent coming in 1995 to 1996, when Republicans forced a shutdown over two periods totaling 26 days.
But Wall Street woke up Tuesday morning to see a global shrug to the 18th US government shutdown. Markets in Germany and France closed over 1 percent higher, and London slipped just a fraction. The dollar fell, however, dropping 0.4 percent against foreign currencies and slipping to its lowest level against the euro in seven months.
But investors seemed just as interested in the best showing for US manufacturing so far this year: Some 56.2 percent of purchasing managers reported an improvement in their businesses in September, up from 55.7 percent in August, according to the PMI index released Tuesday by the Institute for Supply Management.
“When you peel back the layers, you have consumer prices that have risen, you have a GDP that’s been better than expected, you have unemployment rates starting to taper off, so you have a lot of positive factors in the market, which is why probably you don’t see the kind of immediate downturn we may have expected today,” says Charlie Massimo, CEO and founder of CJM Wealth Management in New York.
Looming, however, is the uncertainty about whether it will be a long government shutdown, as well as the possibility of a government default, if Congress cannot agree on terms to raise the debt ceiling.
“The actual markets are going to care much more about the debt ceiling,” says Jerry Webman, chief economist for OppenheimerFunds in New York. “And not so much about the debt ceiling itself, but about the government actually paying its bills.”