Both the S&P 500 ETF (SPY) and the Nasdaq 100 ETF (QQQ) finished deep in the red as the government shutdown extended to its 35th day, tying the record set in 2018-2019 during President Trump’s first term.
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On Tuesday, the Senate failed to advance a continuing resolution bill that would end the closure for the 14th time in a 54-44 vote that required 60 affirmative votes to pass. Democrats have refused to approve any bill that doesn’t include Affordable Care Act (ACA) subsidies to lower healthcare costs. These subsidies are set to expire at the end of the year.
Trump believes that scrapping the filibuster rule could lead to the approval of a Republican-led funding bill that reopens the government. “TERMINATE THE FILIBUSTER NOW, END THE RIDICULOUS SHUTDOWN IMMEDIATELY, AND THEN, MOST IMPORTANTLY, PASS EVERY WONDERFUL REPUBLICAN POLICY THAT WE HAVE DREAMT OF, FOR YEARS, BUT NEVER GOTTEN,” he said in a Truth Social post.
The filibuster is a Senate rule requiring most bills to secure 60 of 100 votes to pass, giving the minority party leverage. Removing it would let a Republican-controlled Senate pass legislation with a simple majority, potentially increasing the chances of the government reopening. Republicans currently hold 53 Senate seats, meaning they would still need at least seven Democratic votes to reach the 60-vote threshold if the filibuster stays in effect.
Meanwhile, statements from Goldman Sachs (GS) CEO David Solomon and Morgan Stanley (MS) CEO Ted Pick at the Global Financial Leaders’ Investment Summit in Hong Kong warning of a significant, but healthy, stock market pullback spooked investors. “It’s likely there’ll be a 10% to 20% drawdown in equity markets sometime in the next 12 to 24 months,” said Solomon, adding that the event would allow investors to “reassess” their holdings. Pick tagged along, saying that the market should “welcome the possibility” of a 10% to 15% drawdown as long as it isn’t “driven by some sort of macro-cliff effect.”
Finally, RBC Capital notes that strong S&P 500 (SPX) earnings have masked a weakening consumer. “The Consumer-related companies that reported last week continued to describe a price-sensitive and value-conscious consumer,” said analysts led by U.S. head of equity strategy research Lori Calvasina. The team pointed out that consumer-based companies have attributed tariffs, less dining out, and shorter vacation durations to this trend.
The S&P 500 (SPX) closed with a 1.17% loss, while the Nasdaq 100 (NDX) fell by 2.07%.
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