Strategist: 'History says that investors have little to fear from government shutdowns'
U.S. stock futures on Monday pointed to a lackluster session as a partial government shutdown stretched into a third day.
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Strategists are saying shutdowns can weigh on the stock market, but they don't tend to bring about heavy selling.
What are the main benchmarks doing?
Dow Jones Industrial Average futures fell by 50 points, or 0.2%, to 25,996, while S&P 500 futures shed 1 point to 2,810. Nasdaq-100 futures was flat at 6,845.
On Friday, the S&P 500 and Nasdaq Composite scored all-time closing highs (http://www.marketwatch.com/story/stock-futures-rise-as-traders-shrug-off-government-shutdown-fears-2018-01-19), while the Dow rose to within 0.2% of its record close that was achieved Wednesday. The three gauges have gained between 24% and 32% over the past 12 months, helped by an expanding U.S. economy, growth in corporate profits and enthusiasm over tax cuts for companies (http://www.marketwatch.com/story/stock-market-investors-eager-for-more-guidance-on-tax-cut-impact-2018-01-20).
What are strategists saying?
"History says that investors have little to fear from government shutdowns, as four of the seven in the past 35 years were accompanied by price declines that averaged only 1.0% and required less than two weeks to get back to break even," said Sam Stovall, CFRA's chief investment strategist, in a note late Sunday.
"We think this shutdown will also be a non-event," Stovall added.
See:This is what happens in the stock market when the government shuts down (http://www.marketwatch.com/story/heres-how-the-stock-market-has-handled-past-government-shutdowns-2018-01-16)
And read:A shutdown 'could reintroduce investors to the fact that markets go down' (http://www.marketwatch.com/story/a-government-shutdown-could-reintroduce-investors-to-the-fact-that-markets-go-down-2018-01-22)
What's driving markets?
Shutdown-related uncertainty appears to be weighing on markets, however. Lawmakers failed Sunday to end the federal government shutdown, as negotiations over immigration continued to roil Capitol Hill.
The Senate was expected to hold a procedural vote (http://www.marketwatch.com/story/compromise-seems-far-off-on-second-day-of-government-shutdown-2018-01-21) at noon Eastern Time on a measure that would keep the government funded through Feb. 8, but it wasn't clear if it would have enough support to advance.
Read:Traders lack 'an appetite to take action' as shutdown runs on -- analysts react to impasse (http://www.marketwatch.com/story/traders-lack-an-appetite-to-take-action-as-shutdown-runs-on-analysts-react-to-impasse-2018-01-22)
Economic reports could be overshadowed or even delayed this week by the shutdown. On Monday, a reading on the Chicago Federal Reserve's national activity index rose to 0.27 in December from 0.11 in November.
Check out:GDP report could fall victim to government shutdown (http://www.marketwatch.com/story/gdp-report-could-fall-victim-to-government-shutdown-2018-01-19)
Also see:MarketWatch's Economic Calendar (http://www.marketwatch.com/economy-politics/calendars/economic)
Which stocks look like key movers?
Apple Inc.'s stock (AAPL) traded 0.8% lower in premarket trading. The dip comes amid fresh concerns about iPhone X sales, with the worries weighing on the Silicon Valley giant's suppliers in Asia (http://www.marketwatch.com/story/asian-markets-unfazed-by-us-government-shutdown-2018-01-21).
Buyout news was lifting biotech stocks Juno Therapeutics Inc.(JUNO)and Bioverativ Inc.(BIVV)by 27% and 63%, respectively, in premarket action. Celgene Corp.(CELG)said it plans to buy Juno for $9 billion (http://www.marketwatch.com/story/celgene-to-acquire-juno-therapeutics-for-9-billion-or-87-a-share-2018-01-22), and Sanofi SA(SAN.FR)(SAN.FR)said it will acquire Bioverativ for $12 billion (http://www.marketwatch.com/story/sanofi-to-acquire-bioverativ-for-116-billion-2018-01-22-24852329).
In other deal news, BioCryst Pharmaceuticals(BCRX) and Idera Pharmaceuticals(IDRA) agreed to merge. Their stocks had been halted pending an announcement earlier.
Insurance company Validus Holding Ltd.'s shares (VR)jumped 45% premarket after giant insurer American International Group Inc.(AIG)announced it's buying Validus for about $6 billion (http://www.marketwatch.com/story/aig-to-acquire-validus-for-556-billion-2018-01-22).
Shares in Halliburton Co.(HAL)traded 1% higher after the oil-field services provider released better-than-expected quarterly results (http://www.marketwatch.com/story/halliburton-shares-rise-after-q4-profit-revenue-beats-2018-01-22), and broker TD Ameritrade Holding Corp.(AMTD)also could see active trading as it's among the companies expected to post earnings before the open.
Streaming-video pioneer Netflix Inc.(NFLX)is due to report after the close.
Shares of Xerox Corp (XRX) rose sharply after The Wall Street Journal reported that the company's biggest and third-biggest investors, billionaires Carl Icahn and Darwin Deason, have formed an alliance and plan to encourage the printer and copier giant to explore a potential sale.
See:Netflix earnings -- did price increases send customers packing? (http://www.marketwatch.com/story/netflix-earnings-analysts-await-update-on-how-price-increases-are-affecting-growth-2018-01-17)
And read:As stocks rocket to records, Ameritrade to roll out round-the-clock trade (http://www.marketwatch.com/story/as-stock-market-rockets-to-records-td-ameritrade-to-roll-out-round-the-clock-trade-2018-01-22)
What are other assets doing?
The ICE U.S. Dollar Index (http://www.marketwatch.com/story/dollar-holds-steady-as-investors-wait-for-shutdown-developments-2018-01-22)was modestly lower as traders waited for developments on the shutdown. European stocks (http://www.marketwatch.com/story/european-stocks-wobble-around-2-12-year-high-as-ubs-falls-washington-wrestles-2018-01-22)were trading slightly higher, and Asian markets closed mostly higher (http://www.marketwatch.com/story/asian-markets-unfazed-by-us-government-shutdown-2018-01-21). Gold futures and oil futures (http://www.marketwatch.com/story/oil-prices-edge-up-after-saudi-urges-producers-to-cooperate-into-2019-2018-01-22)were little changed.
Don't miss:H&M's stock has been cut in half over 3 years -- here's how to play the retailer (http://www.marketwatch.com/story/hms-stock-has-been-cut-in-half-over-3-years-heres-how-to-play-the-retailer-2018-01-20)
(END) Dow Jones Newswires
January 22, 2018 08:44 ET (13:44 GMT)
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