Stock Traders Brace for Extended Shutdown Amid Lofty Valuations
The S&P 500 has, on average, been little changed through the last 20 shutdowns dating back to 1976.
Photographer: Michael Nagle/BloombergAhead of the crucial earnings season, threats to the torrid US stock market rally are compounding. With no end in sight for the government shutdown, traders are gearing up for the aftermath as equity valuations are at eye-watering levels and the labor market shows signs of cooling.
Corporate America is set to start disclosing results next week and expectations are sky-high. The S&P 500 Index is trading at 23 times expected earnings, on par with the dot-com levels, so stocks are vulnerable to any disappointment in quarterly results. Meanwhile, investors are flying “nearly blind” with respect to key economic data as the impasse on federal funding in Washington has delayed reports, JonesTrading said.