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Why investors shouldn’t fear a government shutdown

September 28, 2013 • Business


Storm clouds hang over Capitol Hill in Washington, Friday, Sept. 27, 2013. There have been 17 government shutdowns since 1976, ranging in length from one to 21 days. None have caused a market meltdown. The average decline in the Standard & Poor’s 500 index during a shutdown lasting 10 days or more is about 2.5 percent. For shutdowns lasting five days or fewer, the average decline is 1.4 percent. (AP Photo/J. Scott Applewhite)

NEW YORK (AP) — The government shuts down. The economy unravels. Stocks plunge.

That may be Wall Street’s worst fear, but history shows it’s mostly overblown.

There have been 17 government funding gaps and shutdowns since 1976, ranging in length from one to 21 days. A funding gap is when federal agencies continue to operate without the passage of a regular appropriations bill. None has caused a market meltdown.

The average decline in the Standard & Poor’s 500 index during one of these periods lasting 10 days or more is about 2.5 percent. For those lasting five days or fewer, the average decline is 1.4 percent.

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