US Stock Markets See Decline in Stock Futures as Government Shuts Down

Published on: 22 Jan, 2018

The fall of stock futures over the last few days have stock market players worried, especially after the US government shut down after a bill for government funding was voted down by the Senate.

The Dow Jones Industrial Average fell by 33 points and for a short period, went down by as much as 101 points. The reading for S&P 500 went down by 2 points and NASDAQ 100 futures declined by 8 points.

The US government went into shutdown after the Senate failed to find a solution for the situation before the work-week commenced. The White House blamed the Democrats for the shutdown stating that it was the unpleasant behavior by obstructionists that caused the current situation.

The proposed bill would have kept the government funded until February 16, 2018. Currently, lawmakers are trying to put together a plan that will fund the government until February 8, 2018.

The Democrats are planning to grant immigration concessions to the GOP. The immigration concessions include the border wall between the US and Mexico that was proposed by President Donald Trump.

The immigration bill has always been a sore point among the Republicans and the Democrats with the Democrats keen to pass the bill.

The US government has shut down for the first time in 5 years. The last shut down was in the year 2013 and lasted for sixteen days.

Senate Majority leader, Mitch McConnell has stated that legislation regarding minor immigration and border security will be addressed if such issues were not already addressed by the time the bill for government funding expired on February 8, 2018.

The concerns surrounding such a shutdown has investors worrying and it was evident in the stock market indices for the previous week. A large number of federal workers will not be going to work if the government continues to remain shut down. A persisting shut down will also give financial markets a chance to react to the current dysfunction in the government.

The Dow Jones Industrial Average held on at 283 points and did not go up any further. The case was same for NASDAQ and S&P 500, both of which closed lower. A popular indicator of the volatility expectations of the stock market, the Cboe Volatility index or the VIX went up by 11% by the end of the week.

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Marco Zhou

Email: Marco@financialinsiders.com

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