Do you want to take a guess what the market did during the previous 17 shutdowns? A whole lot of nothing. Of course, any lengthy shutdown would have an impact on many government employees. But it is unlikely to dent the overall economy or the stock market.
To be sure, several of the shutdowns were extremely brief. Eight took place during President Ronald Reagan's two terms in office, and they lasted just 15 days combined.
Four of the Reagan-era shutdowns were for one day only. The lack of any major market reaction to shutdowns over the past 42 years goes to show that Wall Street cares more about earnings and the economy than it does politics.
Related: Here's how a shutdown could hurt the SEC. Economists are predicting that growth will come close to that level again when fourth-quarter numbers are reported Friday. The economy then, as now, was in solid shape. Economic growth rose at a 2. Federal government spending plunged Stocks also rose during the two shutdowns when Bill Clinton was president -- another period when the market and broader economy were going strong.
When the market didn't do well during a shutdown, the reason was once again the economy. Related: What's happening at the IRS during the shutdown. But the mid-to-late s was a terrible period for America's economy. Fears about stock exchange crashes are natural, considering the last time the stock market took a hit, America found itself in an year depression, the worst and longest economic crisis to ever hit the country.
Current stock crashes in China and the impending economic collapse of Greece have stock holders and people in general nervous. But the market is much different than it was in , or even in , which is when the last time NYSE systems went down. Despite the grueling recession we're coming out of, unless the entire stock market crashes completely, one exchange going down does not mean total economic collapse. In , the NYSE handled 80 percent of the market's shares and trading.
Today, the NYSE covers approximately 24 percent. The rest of the market is handled by other exchanges such as NASDAQ or Bats, which means that in a situation like today, if one market goes down, electronic sharing allows the other exchanges to take over handling stocks. Despite the technological glitch, much of today's stock trading went on without disruption.
However, if the exchange were actually brought down by hacking , as many suspect might have happened today, there might actually be valid reason to be concerned. A collapse across various exchanges would have drastic results on the economy and leave the country financial and economically vulnerable.
In such a situation, the stock market would inevitably nose dive, and the security implications could mean that even the government of national security servers could be at risk. But until that happens if it happens , we have no need to worry.
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