Is the stock market affected by the government shutdown

Stocks took off after President Trump's victory because Wall Street got excited that a Republican-controlled Congress would slash taxes and rip up regulations. But last month's failure to repeal Obamcare raised doubts about Trump's ability to work with members of his own party.

Now, investors are on the lookout for more signs of dysfunction in D.

The next big civics test comes on April 28, the deadline by which the federal government needs to pass a spending bill. If Congress fails to act, Trump's th day in office would also mark Day 1 of an embarrassing government shutdown that dents confidence in the administration.

How the Government Shutdown Will Affect Your Investments

A government shutdown, or even a close call, could rattle the stock market. It's not that investors fear the direct impact of a shutdown on the economy, which tend to be short-lived.

Even though a shutdown would hurt people involved by forcing federal contractors to go without pay and closing down national parks. More important for Wall Street, a government shutdown would be evidence of political dysfunction. Not just typical gridlock, the kind that investors were fine with when a Democrat was in the White House and Republicans controlled Congress. But dysfunction at a time when investors have been widely anticipating Congress would take action to help the economy and boost corporate profits.

Will Trump's th day mark the start of a shutdown? Right now, Washington observers are predicting Congress will avert a government shutdown, though they admit the risk has risen in recent weeks.

How Government Shutdowns Have Affected the Stock Market | Charles Schwab

Senate Majority Leader Mitch McConnell told reporters on Tuesday that bipartisan talks are underway on a spending bill and he expects a deal to be reached "before the time runs out," according to Politico. But waiting till the last minute could also spook the market, according to Shannon Saccocia, head of asset allocation and portfolio strategy at Boston Private. That could create some serious concern," said Saccocia.

Wall Street suffered a setback after Republicans pulled the Obamacare repeal efforts, but stocks have since bounced back a little.

Investors will be watching the shutdown issue and other political debates for evidence that the Freedom Caucus that helped upend the health care bill is causing more trouble for Trump. House of Representatives Speaker Paul Ryan is already trying to manage expectations on tax reform, which in turn is exposing fissures within the Republican party.

He said on Wednesday that tax reform will take longer to accomplish than repealing and replacing Obamacare would. They're working on one. The White House hasn't nailed it down," Ryan told an audience in Washington.

Right now, what the market cares about most is Trump's pledge for "massive" tax cuts and sweeping reform of the corporate tax code.

The administration has promised this is possible by August, but that ambitious goal could look even less likely if precious time and resources are wasted on a government shutdown. That it's going to be a lot tougher to get things passed than the voters, and investors, thought early on," Stovall said. Start your day right with the latest news driving global markets, from major stock movers and key economic headlines to important events on the calendar.

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