No Government Shutdown Means The Stock Market Can Recover
While fears of a government shutdown loomed, investors feared how that would affect the stock market. Now that the shutdown has been avoided, the markets will have a chance to correct.
A government shutdown has been narrowly avoided, with Senate minority leader Chuck Schumer saying he would not stop a funding bill from the Republicans. The S&P 500 is currently down 1.39%, and the Nasdaq is down 1.96%. The Dow Jones also fell 1.30% as tariff concerns continue to dominate the market conversation.
What we have seen in recent weeks is that the stock market has left its record highs and has moved into correction territory, which is not where analysts expected it to be. Most blame can be squarely pointed at U.S. President Donald Trump and his tariff policies, which have hurt relations between the United States and China, Mexico, and Canada. The tariffs have also tanked the stock market and caused a complete loss of all the gains made during the November election.
Is the Market Going to Recover?
The fact that there will be no government shutdown could help the situation, but there are still legitimate concerns about how tariffs may lead the US into recession or at least cause serious damage to the gains made since 2024 in the post-Covid economy.
The Federal Reserve has to make decisions as well about how it will issue interest rate cuts. Those cuts could help restore the economy slightly, but the Fed is hesitant to make cuts when the inflation rate is still so high.
The recent Consumer Price Index report pointed to a slightly improving economy and less sticky inflation, but it was not enough to turn the tide on the downward stock market trend.
A few of the key stocks that did so well last year are suffering in 2025, namely Nvidia (NVDA), which has been hit hard for the last few months. Its performance cannot be blamed solely on the economy, as this stock has had to contend with fierce competition from other companies and an investigation by Chinese officials over monopolistic behavior.
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