The Week in Review: October 6, 2025
Government Shutdowns: Why Investors Rarely Care
Historically, US government shutdowns have had minimal impact on the stock market. Let’s review the graphic below. Since 1976, government shutdowns of varying lengths have had little effect on stocks, as measured by the S&P 500 Index.
The government closure began at midnight on October 1. So far, the major indexes have continued to grind higher, with both the Dow and the S&P 500 notching new highs on October 1, 2, and 3. The Nasdaq closed at an all-time high on the 2nd, according to data from MarketWatch.
Political drama and investor indifference
Why do investors typically shrug off a shutdown? While they affect government operations that aren’t deemed essential, they have a limited impact on the overall economy, and they do not affect Social. Security payments, which helps support overall spending.
For the most part, it’s headline risk. And, so far, even that hasn’t affected the broader market.
You see, investors are much more concerned about longer-term economic fundamentals. They focus on corporate profits, interest rates, the general economy—which drives profits—and inflation. If a shutdown has little impact on the economy, it stands to reason that it would probably have little medium- and longer-term impact on stocks.
Meanwhile, the Federal Reserve has grown increasingly concerned about the softening labor market. The unemployment rate is low but has been gradually increasing, while hiring has slowed.
Scheduled for an October 3 release, September’s employment report from the US BLS was delayed due to the shutdown.
While a weaker labor market typically raises concerns about what may be happening in the economy, there has been a curious disconnect between job growth and the broader economy.
One broad measure of economic output is the Atlanta Fed’s GDPNow model. Through October 1, which includes data from July and August, Q3 GDP is tracking at a robust 3.8% annualized pace.
For investors, shutdowns often dominate headlines, but history suggests they have a minimal market impact.
Market Summary
TWO FOR THE ROAD
Investors are still sitting on a mountain of cash, with money market fund assets hitting a record $7.3 trillion, including more than $2 trillion held by everyday investors. Much of it is sidelined money, waiting for a pullback, even as markets push to new highs. It’s a reminder that a lot of gun powder remains for a potential next leg higher if/when that cash comes back into play. - Business Insider, August 16, 2025
“Bull markets climb a wall of worry.” - Joseph Granville
Please do not hesitate to contact me with any questions or concerns.
I hope you have a great week!
Warmest Regards,
Bill Stordahl, CFP®
Managing Director
Stordahl Capital Management
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1. The Dow Jones Industrials Average is an unmanaged index of 30 major companies which cannot be invested into directly. Past performance does not guarantee future results.
2. The NASDAQ Composite is an unmanaged index of companies which cannot be invested into directly. Past performance does not guarantee future results.
3. The S&P 500 Index is an unmanaged index of 500 larger companies which cannot be invested into directly. Past performance does not guarantee future results.
4. The Global Dow is an unmanaged index composed of stocks of 150 top companies. It cannot be invested into directly. Past performance does not guarantee future results.
5. CME Group front-month contract; Prices can and do vary; past performance does not guarantee future results.
6. CME Group continuous contract; Prices can and do vary; past performance does not guarantee future results.