“I think traders are anticipating a two-week shutdown.” – 01:14
Matt Cheslock, Trader at Virtu Financial, joins Remy Blaire at the New York Stock Exchange to discuss the implications of the ongoing U.S. government shutdown, which is now in its second day. The shutdown follows lawmakers’ failure to reach a funding agreement, with Democrats advocating for the extension of key health care tax credits. Remy highlights the historical context of government shutdowns, noting that while they have had limited impact on Wall Street—where the S&P 500 has risen during every shutdown since 1990—the average drop during a shutdown over the past 50 years is approximately 1.6%, with the most significant decline occurring in 1979.
The pair discuss the current state of the S&P 500, which is up 14% year-to-date and recently closed above 6,700 for the first time. Matt shares his insights on the political deadlock in Washington, expressing that traders are becoming somewhat desensitized to the shutdown. However, he warns that a prolonged closure could raise serious concerns for both the economy and Wall Street.
The conversation shifts to the upcoming jobs report and the potential impact of the shutdown on economic data. Matt suggests that a legitimate jobs number in November could provide a clearer picture of the labor market, as the lack of data during the shutdown complicates analysis. He notes that October is historically a strong month for markets, and despite mixed economic data, the markets are trending higher.
Remy and Matt also explore the pharmaceutical sector, which is currently experiencing a surge. Matt points out that pharmaceutical companies are cutting costs to benefit consumers, leading to positive reactions in their stock prices. They touch on the topic of tariffs, with Matt indicating that the news surrounding tariffs is becoming stale, as companies like Nike have already adjusted to the situation.