How the S&P 500 performed after 10 previous government shutdowns

As the government shutdown approaches its one-week mark, investors may be watching how the deadlock in Washington affects their portfolios.

So far, shares are doing pretty well. Although the S&P 500 fell slightly on Tuesday, the index rose 0.80% between October 1 and October 6 and even reached several new highs.

It turns out that market gains during and after the government shutdown are not unusual.

“Historically, shutdowns have rarely derailed stocks,” said Cathy Curtis, a certified financial planner and founder and CEO of Curtis Financial Planning in Oakland, California. Curtis is also a member of CNBC’s Council of Financial Advisors.

Morningstar Direct found that the S&P 500 gained 36% for the year after the last government shutdown ended in early 2019. One hundred days after the close in 1982, the index rose 19.7%.

“Markets are forward-looking and tend to price based on future conditions, not current noise,” said Andrew Hiesinger, founder and CEO of market intelligence platform Quant Data.

Post-lockdown gains are not universal. For example, 100 days after the close in January 2018, the S&P had fallen 4.5% and was still down 3.1% on a one-year basis.

Hiesinger said the stock market hasn’t performed too badly during the current shutdown as investors remain confident in softer inflation and eventual interest rate cuts from the Fed.

“The market has learned to ignore repeated political drama, which rarely changes long-term fundamentals,” he added.

This means investors may also moderate their reactions to headlines, Curtis said.

“The best response to a shutdown is often no response at all,” he said. “Staying invested in the face of uncertainty has historically rewarded those who remain patient.”

S&P 500 closing performance data also shows the benefits of investing in a variety of stocks. through exchange-traded funds or mutual funds rather than through any individual company.