What a government shutdown could mean for markets

Markets are under pressure as a budget battle in Washington threatens the first government shutdown in 17 years. The inability of lawmakers to compromise on fiscal matters and their tendency to squabble right up to key deadlines has investors on edge once again, causing volatility to spike. So, what might this mean for your portfolio? Where we are “The inability of government to hammer out a budget agreement has created a headwind for stocks,” says Azzad Equity Analyst Ahsan Raheem. “The budget debate coincides with the last trading day of the third quarter, the beginning of third quarter earnings season, and another potentially contentious debate over raising the debt ceiling.” Adds Raheem, “All of this is happening against the backdrop of concerns the Federal Reserve may soon end its bond-buying stimulus, which is arguably the biggest market mover of all.” “However,” Raheem notes, “the market consensus is that a shutdown probably won’t last that long.” He and others have opined that once legislators start to hear about the impact of the shutdown on their constituencies, including the hundreds of thousands of government workers who will be furloughed, the tenure of any shutdown could be short. What to do Although the