October Market Update: No Need To Fear The Government Shutdown Boogeyman
This October, some investors are feeling spooked by the continued government shutdown that began on October 1st. But while headlines may feel like something out of a horror movie, history suggests that these budget standoffs are usually more scare than substance.
Most government shutdowns are short-lived and have minimal sustained impact on the economy or the stock market. However, with each passing day, we creep closer to the longest government shutdown on record — and that’s giving some investors a case of financial fright.
Despite the haunted headlines, many essential services will continue without interruption, including Social Security payments, Medicare and Medicaid, FAA air traffic control operations, and other vital lifelines for Americans. In other words, while the government may be in a bit of a zombie mode, it’s not completely lifeless.
Historically, investors have wisely chosen not to be haunted by shutdowns, focusing instead on the real drivers of the market: corporate earnings, consumer spending, business investment, inflation, and interest rates. That said, sectors heavily dependent on government contracts — like defense and life sciences — could experience some short-term volatility chills.
An extended government shutdown could also delay key economic data releases, such was the case for the October 3rd jobs report. That might cause a few market jitters, but in our view, it’s unlikely to deliver a true fright to economic growth. Since 1976, the U.S. has seen 20 government shutdowns, averaging just eight days in duration. The longest — a 34-day marathon in 2018–2019 — felt more like a slow-burning psychological thriller than a market catastrophe.
Even after the fog lifts and a resolution is reached, markets have tended to rebound. The S&P 500 has historically posted average gains of 1.2% and 2.9% in the one- and three-month periods following the end of a shutdown. Like a vampire at sunrise, fears tend to vanish once the light of clarity returns — though, of course, past performance is no guarantee of future results.
Still, even if investors choose to ignore the government shutdown drama, a seasonal scare might be overdue. Given the strong rally since April — and added pressures like tariffs — we see rising odds of a 5–10% pullback, which could feel like a brief Halloween jump scare rather than a true market meltdown.
That said, risk to this bull market remains low. The underlying strength of the economy, robust earnings, the anticipated resumption of the Fed’s rate-cutting cycle, and long-term catalysts like AI-driven productivity gains and fiscal stimulus from the One Big Beautiful Bill Act (OBBBA) are keeping the market’s foundation strong — like garlic against a vampire.
In short, while some near-term volatility may rattle nerves, the broader outlook remains far from frightening. Investors should stay focused on fundamentals rather than the political drama, and consider any market dips as potential treats rather than tricks.
At Victory Wealth Partners, we understand that the scariest investment strategy is having no strategy at all. As fiduciaries, we are committed to acting in your best interest — providing objective guidance tailored to your financial goals.
With markets facing seasonal volatility and headlines that may feel like a haunted house of uncertainty, now is an ideal time to review your portfolio before any major market moves occur. Whether you’re seeking clarity, confidence, or simply a second opinion, we’re here to help you navigate the fog.
🎃 We wish you a safe, successful, and festive end to October — and as always, feel free to reach out if you’d like a fresh look at your investment strategy.
ASHLEY ROSSER, PRESIDENT
Prior to her career in the financial services industry, Ashley earned her Bachelor of Science in Nursing from Cedarville University.
Ashley decided to make a career change from her ten years within the healthcare industry as a pediatric emergency room nurse to retirement and 401K investment planning. She joined Victory Fiduciary Consulting in 2008 after obtaining her Series 65 professional financial license and went on to earn her AIF (Accredited Investment Fiduciary) professional designation from the Center for Fiduciary Studies.
