Adding to the shaky start on Monday: The partial shutdown of the federal government will continue at least until Thursday, and possibly into January. Although the closure of some government services isn’t expected to hurt the economy, the inability of lawmakers and President Donald Trump to put politics aside to enact a budget is unnerving to investors.
“The confusion and disorder surrounding this week’s spending debate suggest fiscal deadlines in 2019 — including the debt limit deadline, which we expect to fall between August to October — could be more disruptive than they have been since the 2011-2013 period,” Goldman Sachs economists wrote in a research note.
The stock selloff in part reflects concern about a looming slowdown in economic growth. Investors’ worries were exacerbated last week when the Federal Reserve signaled no slowdown in its plans to continue raising interest rates next year. The market is also reacting to the Trump administration’s trade war with China. The trade war helped knock China’s stock market into a bear market over the summer.
Still, some market veterans argue that a panicky Wall Street is prematurely pricing in a recession that may not hit until 2020.
CNN’s Cristina Alesci, Donna Borak, Matt Egan and Kevin Liptak contributed to this report.