Wall Street rises 150 points as US government shutdown approaches

The US stock market has an uptick after record lows in December.

US stock trader Source: Bloomberg

Wall Street is rebounding as a US government shutdown looms. US President, Donald Trump, has threatened not to sign a federal funding bill over payment for a US-Mexico border wall.

Trump and Congress battle over border

Trump has called for government funding for a border wall, even though he earlier promised that Mexico would pay for it. His political opponents in the US Congress refuse to pay for the structure and a shutdown of government services is possible. Though federal workers will be impacted, Wall Street isn't usually affected by a government stoppage, as LPL senior market strategist, Ryan Detrick, noted.

‘Although shutdowns get a lot of media hype, the reality is that stocks tend to take them in stride. In fact, the S&P 500[ Wall Street] has gained during each of the five previous shutdowns,’ said Detrick.

Fed hike hurts stocks in December

A more immediate factor affecting Wall Street overall in December is the US Federal Reserve raising interest rates. The US central bank raised the lending rate by one quarter point and that action has driven down the already bearish stock market. Investors were worried about the Fed not supporting stock prices during volatile times. The Federal Reserve raising interest rates has worried investors who are concerned that increasing the interest amount will eventually slow consumer spending and cause an economic slowdown.

However, there is optimism in the US markets as New York Federal Reserve Chair, John Williams, said the Fed may reevaluate the bank's interest rate policy in 2019. Investors will watch and see how the political and economic news will affect the US markets.


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