Skip to Content
Investing Specialists

Markets Get the Government Jitters

The shutdown showdown, possible U.S. debt default, and taper uncertainty filled the worry roster this week.

Mentioned: , , , ,

The market seems to be in worry mode lately. This week, market participants who had been previously watching the U.S. Federal Reserve closely suddenly woke up to the reality of a government shutdown, debt ceiling fights, and a potential default on U.S. debt. I suppose the fears are real, as markets have typically plunged almost 5% in prior shutdowns, followed by huge rallies once things got smoothed out.

That happy-type of ending isn't very visible this time around. Right now, it doesn't seem as if any serious negotiations are going on in Congress. I am not so sure that the market has really priced that in, even with this week's stock market decline. Unfortunately, even a short shutdown could have an effect on economic activity in the fourth quarter.

Robert Johnson, CFA does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.