Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, September 28, 2023.
Brendan McDermid | Reuters
Stocks were lower Monday even after U.S. legislators were able to come to a short-term agreement that staved off a government shutdown.
The Dow Jones Industrial Average declined 168 points, or 0.5%. The S&P 500 traded down 0.4%, while the Nasdaq Composite added 0.2%.
The small-cap focused Russell 2000 fell 1.8% on Monday, pulling it down 0.5% year to date. This marked the first time the index turned negative in 2023, underscoring trouble among small cap names. The Russell 2000 is often thought of as a better insight into the health of the broader economy due to its focus on smaller businesses.
Discover was the S&P 500’s top gainer Monday, with shares up 5%. Health-care company Viatris and DXC Technology rose 3.8% and 3.5%, respectively.
Technology and communications services were the only positive sectors in the broad market index. Communication services added 0.7%, while the tech sector traded 0.5% higher.
The Senate passed a continuing resolution with just hours to spare before a midnight deadline Saturday, which was then signed by President Joe Biden into law. The bill keeps the government open through mid-November, an extended period that lawmakers can use to finalize funding legislation.
Historically, the market “has not cared” about government shutdowns, according to Charles Schwab senior investment strategist Kevin Gordon. He noted that the average gain for the S&P 500 from the start to the end of a shutdown has been “basically flat” in the past.
“I think the conditions that we’re in and that surround us are much more important. So, as we head into the year-end, if [we] don’t see an improvement in key areas of the economy, like housing and manufacturing, if [we] start to see more cracks on labor — I think that would that would definitely take on more importance than just the shutdown itself,” said Gordon.
The yield on the 10-year Treasury jumped more than 10 basis points to 4.674% Monday, as investors sold off safe-haven Treasurys following the news of the averted shutdown.
