On Wall Street, the Mood Is, Shutdown? What Shutdown?

The government shutdown may have entered its second week. But for investors, it’s been business as usual.

Little of the uncertainty that’s loomed over federal workers, food program beneficiaries, and small businesses has so far seemed to reach the markets, which have continued to enjoy record highs. And investors seem largely unfazed by the standoff in Washington, confident that this latest shutdown will—like previous ones—reach a resolution without a long-term effect on the overall economy.

“Shutdowns tend to not be paid much attention to by the market,” says John Stoltzfus, chief investment strategist at Oppenheimer & Co. “Ultimately, what [investors] are looking at…is what is the effect from the problem of the day on revenue growth, or sales growth and earning growth.”

And right now, Stoltzfus says, the damage of the shutdown is being felt, “sadly enough, by the employees who get furloughed, the employees who might be laid off permanently”—not corporations.

“The market isn’t reacting because not a whole lot has really changed for businesses yet,” adds Stephen Kates, a financial analyst at Bankrate. “And there is the expectation that this is still going to get settled.”

In the past, shutdowns have caused relatively small economic blips; economists with Morgan Stanley estimate that quarterly GDP growth declines by .05 percentage points per each week of a shutdown. Even the record shutdown of Donald Trump’s first term, which lasted 35 days, only knocked $3 billion off the GDP. They’ve even been seen as an opportunity; the defense and health care sectors, in particular, lean heavily on government contracts, as Morgan Stanley notes. For investors, the bet is that the past will be prologue.

But there’s a possibility that this situation could be different. For one thing, the shutdown is playing out against the backdrop of broader economic uncertainty, as reflected in the ongoing surge in gold prices, which rose past $4,000 per ounce for the first time ever Tuesday, with investors also turning to Bitcoin. (A BNY Investments outlook notes that “precious metals tend to rally” as a shutdown continues and markets are impacted.) For another, the shutdown is delaying the release of economic data—some of which has undermined Trump’s claims of a turbocharged economy—potentially leaving investors in the dark. And, of course, there is the nature of this shutdown: “I feel like they’re gridlocked today more than they were even in the first Trump administration,” Kates says.

The showdown began in earnest last week, when dueling spending bills—a stopgap proposed by the Republican majority, and a Democratic plan to extend health care subsidies and reverse GOP cuts to Medicaid—failed in the Senate ahead of the government’s October 1 deadline.

Democrats had been urging leadership to take a tougher stand against the Trump administration after caving in an earlier spending fight in March. Republicans, taking their cues from Trump, have given little indication that they will budge: The president is using the shutdown to target “Democrat agencies” in Washington, leaning on White House budget director Russ Vought—a Project 2025 mastermind likened to “the reaper” in a bizarre AI video Trump shared on social media last week—to put pressure on the opposition party. “We don’t control what he’s going to do,” John Thune, the Senate majority leader, said last week. “This is the risk of shutting down the government and handing the keys to Russ Vought.”

Even so, nine days in, negotiations are at a standstill: Democrats, buoyed by polls suggesting that voters may blame Trump and his majority for the shutdown, appear committed to holding the line on health care. And the House Republican conference didn’t even return to session this week: “The House will come back into session and do its work as soon as Chuck Schumer allows us to reopen the government,” Speaker Mike Johnson told reporters last Friday. Trump, meanwhile, is not only trying to use the shutdown to purge more federal workers; he suggested on Tuesday that he may try to deny some furloughed employees the back pay they are owed by law. “It really depends on who you’re talking about,” Trump told reporters.

At this point, some lawmakers reportedly don’t expect any breakthroughs until at least next week, when active military members would miss their first paychecks. That would make it one of the longest shutdowns in US history—with no end in sight.