Despite all the doom and gloom surrounding the federal government’s shutdown, stock markets are doing just fine. In fact, markets are up.
The Standard & Poor’s 500-stock index added 0.4 percent during early trading and the Dow Jones industrial average went up 0.2 percent, according to the New York Times. Gold went up less than one percent.
“Investors should look past the near-term vagaries and remain focused on their knitting, which for most of us, means buying good companies below fair value,” Marc Chandler, global head of currency strategy at Brown Brothers Harriman, told Market Watch.
International markets also rose as well. Europe stocks were up 0.68 percent earlier and Asian markets rebounded after falling initially on news of a government shutdown.
Republicans and Democrats failed to reach an agreement last night that would have continued to fund the government, which has resulted in 800,000 federal workers being furloughed and more than one million government employees having to work without pay.
However, observers worry that a government shutdown could affect the upcoming debt ceiling negotiations. If the debt ceiling is not raised, economists argue, the U.S. economy could suffer.
“The consequences of a debt default would be harmful not only to the U.S. economy but also globally, given the importance of the U.S. Treasury market as a global financial benchmark,” wrote analysts from DBS in Singapore. “A default would likely lead to a renewed sharp economic downturn, pushing the economy back into severe recession and probably another serious banking crisis.”
Last year’s debt negotiations went into the 11th hour before Congress came to an agreement over raising the country’s debt limit.
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