On a tumultuous Wednesday morning, Wall Street braced itself for the fallout from a looming federal government shutdown, prompting both the S&P 500 and Nasdaq indexes to take a step back. The S&P 500 slipped by 0.2%, while the Nasdaq Composite experienced a slightly steeper decline of 0.3%, dropping over 70 points shortly after the opening bell. Meanwhile, the Dow Jones Industrial Average maintained a more stable position, hovering close to flat despite an early dip of 52 points.
This downturn came in stark contrast to the market’s robust performance in September, where the S&P 500 enjoyed a commendable rise of more than 3.5%. However, the optimism quickly faded as investors processed a troubling report from ADP, which revealed that private-sector employers had cut 32,000 jobs in September—significantly missing economists’ expectations for a gain of 45,000 jobs. This marked the steepest decline in employment since March 2023. Compounding the disappointment, ADP revised its August figures to reflect a loss of 3,000 jobs, a stark reversal from the previously reported increase of 54,000.
With the Labor Department effectively sidelined during the government shutdown, the upcoming September nonfarm payrolls report will remain under wraps, leaving traders to rely on private sector surveys for insights. Jay Woods, chief market strategist at Freedom Capital Markets, highlighted the market’s precarious position, stating, “The market seemed to be looking for a reason to sell off after bucking the seasonal weakness we tend to experience in September. While the shutdown was expected, the lack of progress and urgency to a resolution has investors concerned.”
In the midst of these developments, gold prices surged to unprecedented levels, surpassing $3,900 an ounce as investors sought refuge from riskier assets. Concurrently, the dollar slid 0.2% to 97.61, positioning it for its most significant annual decline since 2003. This surge in gold, marking its 39th record this year, reflects a growing demand for safe-haven assets amidst economic uncertainty and a weakening greenback, which has already depreciated by 10% in 2025.
Historically, the S&P 500 has demonstrated resilience during past government shutdowns. For instance, during the five-day shutdown in November 1995, the S&P 500 actually rose by 1.36%, averaging a daily gain of 0.27%. Another shutdown shortly thereafter, lasting 14 days from December 1995 into January 1996, resulted in a more modest increase of 0.16%, translating to an average daily return of 0.01%. The October 2013 government shutdown, which stretched over 14 trading days, saw the S&P 500 advance by 3.17%, averaging 0.23% per day.
Even during the longest shutdown in modern history—from December 2018 through January 2019—equities rebounded sharply, with the S&P 500 surging by 10.43%, averaging daily returns of 0.47%. This historical context suggests that while government shutdowns create immediate ripples of uncertainty, the long-term impacts on the stock market can be surprisingly muted.
As investors grapple with the current scenario, the question remains: will the historical resilience of the S&P 500 hold true once again? With growing concerns about economic stability and job losses adding to the volatility, traders will be closely monitoring developments in Washington for any signs of resolution. As the situation unfolds, the interplay between government actions and market responses will undoubtedly remain a focal point for analysts and investors alike.
