Concerns of a stock market crash are growing as economists await the release of the second-quarter GDP report, which could provide insight into the impact of the Federal Reserve's rate-hike campaign and future monetary policy changes. The report may have a significant effect on equity markets, which have been sensitive to economic data releases this year.
A potential government shutdown could have limited impact on the stock market, but could reduce economic growth by 0.15 percentage points per week and potentially cut 1.2 percentage points from fourth-quarter growth; however, the market tends to be unaffected by shutdowns and is more influenced by corporate developments and macroeconomic factors.
The potential government shutdown threatens to deprive the Federal Reserve of crucial data on the labor market and inflation, which could hinder its ability to make informed decisions about the economy and interest rates.
Summary: Investors shouldn't worry about a government shutdown as it is unlikely to significantly impact the stock market.
Despite threats such as a government shutdown, the UAW strike, rising gas prices, and the resumption of student loan repayments, economists are mostly unconcerned about a potential economic slowdown, believing the economy to be internally robust but vulnerable to mistakes.
Investors are focusing on the release of economic reports on GDP and inflation as they evaluate the Federal Reserve's stance on interest rates and its efforts to cool down inflation. Metal prices have slipped due to concerns over global demand and the economy, and the risk of a government shutdown is also adding to the bearish sentiment. Earnings reports from various companies and core PCE inflation data are expected in the week ahead.
The publication of major U.S. economic data, including employment and inflation reports, will be suspended indefinitely if the federal government shuts down due to lack of funding, leaving policymakers, investors, and businesses in the dark for key decision-making.
Investors are concerned about the possibility of a US interest rate hike and a government shutdown, which could impact the US credit rating and push the world's top economy into recession.
The possibility of a government shutdown in the U.S. could have negative implications for the crypto industry's regulatory progress and projects, similar to the effects seen in the previous shutdown in 2018 and 2019, with delays in approvals and a withdrawal of a bitcoin ETF application.
The impending government shutdown may have an impact on the financial markets, according to Kristina Hooper, Chief Global Market Strategist at Invesco.
A government shutdown in the U.S. could cause significant disruptions in the stock and bond markets, with the Securities and Exchange Commission being forced to furlough most of its staff and leaving the market oversight at a "skeletal" crew level.
A government shutdown would have widespread effects on everyday Americans, including reduced economic growth, closure of national parks and museums, disruptions in air travel and student loans, delays in tax and loan processing, a "data blackout" for economic statistics, and complications in law enforcement, military services, consumer product inspections, and social safety net programs, among others.
A potential government shutdown in the US may lead to a delay or absence of the September consumer-price index report, which would complicate decisions for financial markets and the Federal Reserve.
Investors will be keeping a close eye on the latest data on the U.S. labor market this week, which will have implications for consumer spending and the Federal Reserve.
Investors will be closely watching market reactions to a late deal to avert a government shutdown, as well as key data on the labor market this week, while concerns about higher interest rates and the impact on the economy weigh on stock futures.