3 Decades of Data Reveals Market’s True Response Pattern to Shutdowns

by Chris Pulver | Oct 2, 2025

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Government shutdown headlines are everywhere, and the fear-mongering and blame game is reaching a fever pitch. But before you start panic-selling or hedging your entire portfolio, I decided to dig into the actual data — and what I found might surprise you.

Instead of listening to the talking heads, I pulled up 30 years of government shutdown history and analyzed exactly how the S&P 500 (SPY) performed during every single shutdown over 1-, 3-, 6- and 12-month periods.

The results? The market generally doesn’t care about shutdowns, with average returns remaining positive across all time frames.

The Numbers Don’t Lie

Let’s start with some specific examples. The 1995 shutdown saw 2.5% gains in one month, and 22% gains over 12 months. The 1996 shutdown delivered similar positive performance. Even the 2013 shutdown maintained positive performance across all periods.

Here’s where it gets interesting — the 2019 shutdown was the longest in history, yet it still produced 9% gains in one month, and 22% over 12 months. The Fed’s dovish policy shift helped fuel that rally, proving that monetary policy matters more than political theater.

The only real exception was 2018, which showed negative returns ranging from -3.3% to -5%. But that wasn’t because of the shutdown itself — it was due to broader market volatility from February’s vol event that ended 2017’s historic 12-month streak of positive returns.

What This Means for Your Trading

The aggregate data shows markets rose during three out of seven shutdowns, but average returns remained positive long term despite short-term volatility ranging from -4% to +9%.

That’s a massive range, but the key takeaway is clear: Shutdown volatility creates opportunities rather than disasters.

Look, the 12-month performance shows a range from 5% lower to 30% positive — that’s incredible variance, but it tells you everything about how markets actually behave during political uncertainty.

The bottom line? Don’t let the headlines drive your decisions. The market has consistently shown it doesn’t really care about government shutdowns, and the data proves it. Instead of panicking, use any shutdown-driven weakness as a potential opportunity.

I’ll see you in the markets.

Chris Pulver
Chris Pulver Trading

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