The government is clocking back in

The US government’s 43 days of quiet quitting are officially over—for now.

Today, the House approved a bill that brought an end to the longest government shutdown in history.

Tallying the damage

While the most catastrophic effects of the shutdown included extra long airport security lines, an economic data blackout, and halting of government benefits like SNAP, the stock market fared pretty well: The S&P 500 closed yesterday up some 2% since day one of the shutdown.

While shutdowns don’t necessarily wreck the economy, the downstream effects could sneak up on investors over the next few months. For one, key macro data like the October CPI and job reports might be gone forever, according to the White House. On top of that, this particular shutdown hit consumer sentiment hard, leading to bad vibes across the economy that could reverberate during the holiday shopping period.

“Investors are right to believe that we barely averted catastrophe,” explained Jeffrey Roach, Chief Economist for LPL Financial in a note. “Had the shutdown phase crept into the biggest shopping season of the year and during peak holiday travel, we would probably be talking about a greater chance of recession. Thankfully, we averted a bigger crisis.”

So what now?

Historically, the S&P 500 tends to make a full recovery after the government reopens. The index has risen an average of 11.5% one full year after a government shutdown, CNBC reported today. Zooming in, the index has posted an average return of 3.3% over the three months following a shutdown, and gained 7.8% in the six months afterward.

But what about the Fed? “With the US government likely to reopen imminently, markets are hoping for the resumption of official data to solidify their assessment of the Fed’s future rate decisions,” wrote Global Head of Equities at UBS Ulrike Hoffmann-Burchardi. “We continue to expect the US central bank to cut rates twice more between now and early 2026, providing a favorable backdrop for equities, quality bonds, and gold.”

Taking a T-break

One surprising victim of the end of the shutdown is cannabis stocks, which are falling hard today.

While the new funding bill reopened the government, it also includes provisions tightening regulations on THC hemp products. Tilray Brands fell 8.13%, Green Thumb Industries dropped 3.14%, and Trulieve Cannabis Corp. sank 8.58%.

And don’t forget: The spending bill only funds the government through January, so we could be doing all this again in a few short months.—LB