Wall Street rises 150 points as US government shutdown approaches
The US stock market has an uptick after record lows in December.
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.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
Live prices on most popular markets