Wall Street asks: ‘What shutdown?’

Oct 1, 2013
HTML EMBED:
COPY

Wall Street asks: ‘What shutdown?’

Oct 1, 2013
HTML EMBED:
COPY

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.

We’re here to help you navigate this changed world and economy.

Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.

In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.

Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.