The current budget standoff in Congress for the first time in 17 years is an opportunity for many stock investors and not necessarily all about doom and gloom.
The Standard & Poor's 500 Index had increased 11% on the average in the year after a government shutdown. This was according to Bloomberg compiled data on instances such as what is happening since 1976. This rise resulted in an average return of 9% after twelve months. In previous instances of government shutdowns, the US equity benchmark registered higher by the end of the next two years.
The S&P 500 fell in seven in the past eight days with concern over the impasse over US budget and debt limit would result in economic downfall, The analysts forecasts indicate earnings to increase at the highest rate in the past two years. About 300 companies in the S&P 500 are set to report their earnings this month, according to data compiled by Bloomberg.
The US government would be partially shutdown as the impasse over the 2010 health care bill amendments as its extension on government funding was debated. Immediately after resolving this, Congress should immediately act to raise the next fiscal dispute to raise the USD16.7 trillion debt ceiling.
Join the Conversation