If the government is forced to shut down, it shouldn’t have much impact on the markets.
In fact, it could result in further market upside.
As just noted by CNBC, “Data compiled by Raymond James shows the S&P 500 has averaged a 3.2% gain during government shutdowns going back to 1995. The most recent one, which took place between late 2018 and early 2019 and lasted 22 trading days, saw the S&P 500 rally more than 10%.”
That’s because investors don’t really focus much on the shutdown. Many know that even if the lights go off for a few days, the government will reopen, and the economic impact won’t be so bad.
One of the worst shutdowns came in late 2018-19 when the government shut down for about 22 days. Still, during that time, the S&P 500 managed to tack on about 10.4% of the upside. If you’re concerned markets could flop on the news, don’t worry about it.