Wall Street asks: 'What shutdown?'
Traders work on the floor of the New York Stock Exchange on Oct. 1, 2013 in New York City. Despite a government shutdown for the first time in nearly two decades, the Dow Jones industrial average, the S&P 500 and the Nasdaq all rose slightly higher in early trading this morning.
Despite the drama in Washington, it was almost just another day on Wall Street. Before the government shutdown, investors fretted. Today, they pretty much ignored it.
It’s not that Wall Street doesn’t care, but it kind of doesn’t care. Plenty of people bought stocks today.
“I hardly have five, 10 minutes to take lunch today because we’re so busy,” says Simon Rosenfeld, a senior vice president at Meridian Capital Group, as he walked past the New York Stock Exchange. “We haven’t noticed any slowdown at all.”
That pretty much summed up the mood.
“There hasn’t been any rush to the safe haven of the bond. There hasn’t been any rush to the safe haven of the dollar,” says Jim Paulsen, chief investment strategist at Wells Capital Management.
In part, he says, the relative calm represents a cultural shift.
“We’ve given up the Armageddon ghost that so haunted us for a number of years after 2008, where any news story that came up about the end of the world, we latched onto and believed it,” Paulsen explains.
And, dysfunction in Congress is almost normal now.
The government shutdown “was a widely anticipated event,” says Adolfo Laurenti, deputy chief economist with Mesirow Financial in Chicago. “I think so far on Wall Street there is also the expectation that this will be relatively short-lived.”
A weeklong shutdown might hurt pockets of the economy but it won’t do much harm to the country as a whole, he says. But he adds, “If we see the stalemate persist during the next week, and most importantly if we see the October 17 date approaching, the mood in the market will definitely sour.”
October 17 is when the U.S. Treasury says it will run out of money. Unless Congress raises the debt ceiling, the government could default. The last time President Obama and House Republicans fought over this, stock prices and business confidence suffered. The shutdown showdown may just be a warm up for round two of that fight.