1. Home
  2. >
  3. Stock Markets 🤑
Posted

Markets Often Decline Before Shutdowns but Rebound Afterwards, Historical Data Shows

  • Markets typically decline ahead of government shutdowns - median S&P drop of 10% before shutdowns of 10+ days since 1976.

  • During shutdowns markets are mixed - S&P median drop of 2%, but up 50% of time.

  • Markets often rebound strongly after shutdowns - S&P median gain of 19% in 12 months after.

  • S&P already down 6% from highs, in line with typical pre-shutdown declines.

  • Shutdowns heighten uncertainty but tend to have minimal lasting impact on markets.

yahoo.com
Relevant topic timeline:
After a strong surge in June and July, the S&P 500 index has experienced a significant decline in August, with tech stocks being hit particularly hard, as fears of rising interest rates and a slowdown in China weigh on the market.
Goldman Sachs analysts predict that the U.S. government is "more likely than not" to shut down later this year due to spending disagreements, which could temporarily impact economic growth by reducing it by 0.15-0.2 percentage points per week, with past shutdowns having minimal impact on equity markets.
The S&P 500 Index reached a high in July but has since experienced a pullback of -4.8% in the first three weeks of August, with further downside possible, although the market may be near a turning point.
The S&P 500 has fallen nearly 5% in August, and opinions on whether stocks will rebound are divided among Wall Street firms and market commentators, with some, like Goldman Sachs and Fundstrat, remaining optimistic while others, including Michael Burry and David Rosenberg, are bearish.
The S&P 500 could experience significant gains in the coming months following the end of the current rate hike cycle by the Federal Reserve, with historical data showing positive returns after previous cycles and strong economic indicators supporting this trend. Investors are advised to consider investing in an S&P 500 index fund or industry-leading stocks like Amazon.
The S&P500 rose on Wednesday, supported by signs of weakness in the labor market and slower economic growth, reinforcing expectations of a Federal Reserve pause next month.
Despite economic challenges, the S&P 500 is expected to continue its strong growth, potentially increasing by as much as 11% as the summer season ends, driven by companies like Apple, Microsoft, Google, Amazon, Nvidia, Tesla, and Meta, according to Morgan Stanley analyst Andrew Slimmon.
The S&P 500 ended lower and the Nasdaq higher as U.S. inflation data met expectations, signaling a potential pause in monetary tightening by the Federal Reserve, while Salesforce shares climbed following a positive revenue forecast.
The S&P 500 had a good week, rising 2.5% and coming 1.6% below the 2023 high-water mark set in July; however, there is a possibility of a recession if the Fed keeps rates high for longer than necessary.
Despite its high valuation, a strategist predicts that the S&P 500 can still continue to rise.
Economist Gary Shilling predicts that the S&P 500 will decline by around 40% during this market cycle, citing recession indicators such as the yield curve and The Conference Board's Leading Economic Index. He believes that a US recession may already be underway due to the Federal Reserve's focus on reducing inflation, and high valuations in the stock market increase the likelihood of a significant drop.
Wall Street finished the week with a decline in stocks, as the S&P 500 posted its second consecutive losing week, with technology and retail sectors contributing to the slide, while investors await the upcoming Federal Reserve interest rate policy meeting.
Investors should not be overly worried about the potential government shutdown's impact on the market, as historical trends indicate that any weakness will likely be a buying opportunity from a short-term trading perspective.
The S&P 500 is expected to rise 13% by June 2024, according to a historical correlation between first-half returns and subsequent 12-month gains, indicating a potentially bullish outlook for the stock market.
The S&P 500 showed multiple warning signs of a coming selloff, with indicators suggesting a potential downtrend and volatility in the stock market, prompting caution for investors and the need to closely monitor next week's market action and earnings report season.
Bitcoin and the S&P 500 are likely to end the third quarter lower due to the strong case for owning bonds over stocks, with government bonds offering a higher return, making them more attractive than risk assets like cryptocurrencies.
The recent market pullback continues as the S&P 500 is down 2.9% for the week and 5.9% below its high-water mark, but the broadening of market participation is a positive indicator for the sustainability of the bull market.
The S&P 500 is likely to experience more pain in the stock market unless the rise in Treasury yields and the U.S. dollar comes to an end, based on technical charts and trends among index components.
The impending government shutdown may have an impact on the financial markets, according to Kristina Hooper, Chief Global Market Strategist at Invesco.
The stock market's bull case depends on the S&P 500 breaking above a key level for continued gains.
Wall Street turned lower as concerns over interest rates, rising oil prices, and a possible government shutdown weighed on the market, with the Dow Jones and S&P 500 both experiencing losses.
Investors are concerned about a potential showdown for the S&P 500 as stock market commentator, Heisenberg, shares a chart indicating bearish patterns and a major trend line off the October lows, suggesting a sharp drop in the index. Rising bond yields, climbing oil prices, and fears of slowing consumer spending are also factors contributing to investor unease.
The S&P 500 fell as investors reacted to an inflation report and adjusted their portfolios on the last day of a weak third quarter for stocks, with the benchmark index also on track to post its biggest monthly percentage drop of the year.
The S&P 500 has been hit hard by the September Effect, but investors should remain optimistic as history suggests the market will rebound, and there are compelling buying opportunities in certain growth stocks like Block and SolarEdge with upside potential of 93% and 127% respectively.
The S&P 500 closed out the quarter with a 3.6% loss, attributed to factors such as rising interest rates, a slowing housing market, and businesses preparing for tough times, resulting in a slow decline in stocks. Additionally, the resumption of student loan payments and expectations of more rate hikes from the Federal Reserve are expected to impact consumer spending power and business cutbacks. However, as the year comes to an end, traders and investors may look forward to 2024 for possible rate cuts and a return of strength in the market.
The Federal Reserve's aggressive interest rate hikes have resulted in a decline in the profitability of S&P 500 companies, with the return on equity ratio falling this year, and the trend could worsen if interest rates remain high.
The S&P 500 Index rebounded following a selloff as dip buyers found an overreaction to the blowout US jobs report, driving gains and reversing losses.
The S&P 500 experienced a 7.83% drawdown, but current volatility expectations are lower than past periods of similar declines, suggesting that the market is experiencing a normal correction rather than a bear-market-like drawdown.
The S&P 500 bull market celebrated its first year, but with relatively weak performance compared to historical data, there is potential for solid gains in 2024, especially considering the strong second year performance typically observed, as well as the potential seasonal tailwind of an election year.
The S&P 500 celebrated its first anniversary since reaching its bear-market low, but some experts argue that the market's weak performance in the past year may not qualify it as a strong bull market just yet.
The S&P 500 has seen a strong bounce off its previous low, but it has yet to fully recover, and the recent rise in Treasury yields and geopolitical conflicts contribute to a cautious outlook on the market's future performance.
Investors are growing concerned that the S&P 500 in 2023 is displaying similarities to the pattern preceding the 1987 crash, such as a strong start to the year, a sell-off in the third quarter, rising interest rates, underperformance by rate-sensitive sectors, and a strong dollar; however, experts believe there are enough differences between the two periods to suggest that a crash-like event is unlikely.
Despite ongoing macro headwinds, S&P 500 companies are beating earning expectations and signals suggest that corporate America's earnings recession may be over, however, the macro picture and uncertainties still create choppiness and challenges for companies.
Wall Street bear Michael Wilson maintains his prediction that the S&P 500 will end 2023 at 3,900, citing weak market breadth, waning consumer confidence, and tempered earnings growth expectations as reasons for a potential further drop in stocks.
The S&P 500 is at a crucial moment as it is caught between key technical levels, and the next phase of the bull market hinges on a breakout; year-end seasonality is expected to be positive for the stock market.
The S&P 500 Index is facing obstacles in maintaining a bullish trend, with a downtrend line and an unfilled gap on the chart, while resistance is observed at around 4380; however, there is still a McMillan Volatility Band buy signal in place, indicating some positive aspects.
The S&P 500 index fell below its 200-day moving average, signaling a bearish signal, but oversold conditions suggest a potential turnaround in the near future.
The S&P 500 is experiencing a volatile and uncertain market, causing many investors to give up, but understanding the nature of the volatility and the current strength of the economy can help align portfolios for future gains, especially with GDP estimated to be at 3.5% - 5.4% for Q3 and PCE Inflation expected to drop to 3.1% moving closer to the Fed's 2% target.
John Hussman, who accurately predicted the 2000 and 2008 market crashes, warns that the S&P 500 could drop by as much as 63% due to high valuations and weak market breadth, which have historically led to significant losses for investors.
The S&P 500 is currently in a downtrend, but there is a positive signal for the defensive consumer staples sector, according to Lawrence G. McMillan.