The Longest Shutdown Meets All Time Highs: What History Says, What Is Different Now

The United States has slipped into the longest government shutdown on record. Markets usually dislike policy drama. Yet global equities are still hovering near fresh all-time highs even as Washington remains closed for business. That tension is the story. It invites a simple question with a complicated answer. Do shutdowns actually matter for investors, and if not, why does this one feel so different? Recent reports confirm that the current closure has passed the prior record of thirty-five days set in Trump's first term.  

To understand what is happening, we need to place this episode next to the last thirty years of funding standoffs. We also need to look beyond stocks to commodities and especially to the precious metals that investors reach for when confidence thins.
‍

What the Record Shows about Shutdowns and Stocks

The historical record is surprisingly calm. Across the big modern shutdowns, stocks have often held up or even rallied. In 1995 and 1996, the S&P 500 rose modestly during the second and longer closures. In 2013, the index gained more than two percent during the event and hit a new high on the final day. During the 2018 and 2019 record shutdown, the index rose more than ten percent from trough to peak over the period.

‍

Several recent summaries reach the same conclusion. On average, shutdowns have had limited and short-lived effects on equities and returns often remain positive one to three months later.

‍
Why? Markets discount cash flows over many years. A multi-week pause in government services typically has little impact on the long-term earnings path of large listed companies. Investors also know shutdowns end. The policy path appears messy in real-time, but the cash registers keep ringing, and the fiscal spigot usually reopens. That was true in 1995, 2013, 2018, and 2019.

‍

There is a second reason. Shutdowns often coincide with easing financial conditions elsewhere. If the Federal Reserve is expected to cut, as it has just done, or if bond yields are falling due to growth or safety concerns, the valuation tailwind can more than offset the policy noise. That pattern has shown up repeatedly in the historical returns that followed past standoffs.

‍

Why this Time Looks Different, Even if the Tape is Strong

If shutdowns tend to be noise, why do investors feel on edge today? Several factors make this episode unlike earlier cases.

‍

First, the duration. The current closure is now the longest on record. A week or two is easy to shrug off. Passing the old record shifts the conversation from nuisance to signal. Expectations for administrative delays and data gaps continue to rise with each passing day. Some official releases and functions go dark. This can increase uncertainty and sometimes volatility in specific market segments.
‍

Second, the macro backdrop. This shutdown arrives after a giant rally that has carried global market value to roughly $148 trillion dollars. Valuation and positioning are more extended than they were in previous shutdowns. When prices are rich, the same headline risk can have a larger impact. Even so, equities are at highs because investors also see:
‍

• a powerful earnings and liquidity story in artificial intelligence spending
• corporate buybacks continuing
• and signs that policy rates are near a peak

‍Third, the composition of leadership. Mega-cap technology and digital infrastructure now dominate index-level returns. These firms sell globally and depend less on federal procurement than older leaders. That reduces direct exposure to temporary spending lapses and helps explain why the indexes have been resilient. There were no NVIDIAs in the 1990s, worth trillions of dollars, selling to every major tech market on the planet.

‍

Fourth, fiscal arithmetic. A shutdown does not fix the deficit. It delays it. Markets understand that the long-run issues around debt service costs and program spending will be waiting on the other side. That can be bullish for real assets if investors expect easier policy in the future. It can also support quality growth equities if investors expect rates to drift lower. The forward-looking response depends on the next macro catalyst.

‍

How Shutdowns have Lined up with Gold and Copper

Gold is a simple test of confidence. In prior shutdowns the metal has often caught a bid at the start, then cooled once a funding deal looked likely. This time, the move has been larger and more persistent. Several commodity desks and trade press outlets noted that gold set fresh highs as the new fiscal standoff began, then gained further through the first month of the closure. The lack of some government reports during the event also added to the sense of uncertainty that supports haven demand. Despite selling off in recent sessions, gold remains near $4,000 per ounce.

‍

Copper tells a different story. Known as Dr. Copper, the metal is a barometer for global activity. Its behavior around shutdowns depends less on Washington and more on China growth, energy prices, supply outages, and the dollar. In the current episode, copper has traded on those global forces rather than on the domestic funding fight. Analysis through October pointed to firm industrial demand and supply issues that lifted prices regardless of the shutdown timeline.

What happens after? When shutdowns end, gold often gives back some haven premium if the end comes with a clear path on rates and data. If the end comes with fresh easing or softer growth data, the metal can hold or extend gains. Copper typically returns to the global growth narrative within days.

‍

The Pattern Inside Equities

Examining sectors during prior shutdowns reveals a few recurring tendencies.

‍

Defensives such as staples and utilities often tread water because they already trade as bond-like cash flow machines.

‍

Banks care more about the yield curve than about federal paychecks. If the curve steepens on the other side of a deal, the group can catch up quickly.

‍

Defense, health care, and contractors can pause during a closure if there is concern about invoice timing, then rebound once new funding passes.

‍

The leaders of this cycle, the platforms and chip makers, are driven by CAPEX cycles and secular demand rather than by short-term federal outlays, so they can continue to lead.

‍

The headline reaction is not always intuitive. In 2013, the index climbed and set a high on the final day. In 2018 and 2019, the best ten-day performance during any shutdown period in the data series was recorded. More recent summaries by several research groups and brokers capture that counterintuitive strength. The current episode has been consistent with those precedents so far.

What this Means for Macro Investors Today

Think in scenarios rather than single-point forecasts. The tape is strong now, but the path forward hinges on three key factors:

‍

Scenario one, clean resolution and softer inflation data

A deal ends the shutdown, data resumes, and incoming reports show progress on inflation. Bond yields ease, the dollar drifts, and equities move higher. In this case, gold may hold gains, especially if the market also expects policy easing. Copper trades on the global demand pulse. Positioning would favor large-cap growth at first, then broaden if yields fall further and earnings revisions turn up.
‍

Scenario two, messy resolution and sticky inflation

The shutdown ends, but the path to rate cuts looks slower. Yields stay firm. The dollar stays supported. Indexes can chop while leadership narrows. Gold cools unless geopolitical or credit stress rises. In this scenario, select cyclicals with pricing power and strong balance sheets do better than the broader tape.

‍

Scenario three, no quick deal and rising growth risk

Prolonged disruption raises growth concerns. Defensive quality and cash flow resilience matter. Gold haven flows pick up. Copper looks vulnerable unless the dollar slips. Equity volatility rises as investors debate recession odds. Sector leadership rotates frequently. During earlier decades, this kind of macro setup pressured stocks. Today, the market structure is different, with passive flows and buybacks smoothing the path, but not removing risk.

‍

Keep in mind, the Republican president signaled he was prepared to withhold SNAP benefits for roughly 42 million Americans — a day after the U.S. Department of Agriculture announced it would tap emergency funds to maintain reduced payments in November.

‍

How to Read the Next Few Weeks in the Markets

Watch the credit market before reacting to the next headlines. Credit spreads lead equities when policy stress becomes economic stress. If spreads stay anchored, the market is likely looking through the shutdown toward the next policy and earnings catalyst.

‍

Watch the dollar. A stronger dollar tends to weigh on commodities and certain parts of emerging market equities. A softer dollar can lift copper and support a broader risk bid.

‍

Watch the policy mix. A shutdown that ends with some fiscal clarity and a benign path on rates is not the same as a shutdown that ends with a debt ceiling scare or messy continuing resolutions. Markets price the mix, not the headline. Don't forget that in late-2024, in a phone interview with NBC News, Trump proposed eliminating the debt ceiling altogether. In Trump calls for abolishing the debt ceiling, he said:

“The Democrats have said they want to get rid of it. If they want to get rid of it, I would lead the charge.”

Watch breadth. If new highs emerge with improving breadth and rising earnings forecasts, the rally has stronger foundations. If new highs are narrow and earnings revisions are flat to down, the risk of a valuation air pocket is larger.

‍

A Brief Tour of the Big Shutdowns

A quick chronology helps set expectations.
‍

1995 and 1996. A pair of closures during the Clinton era. The second, at twenty-one days, was the longest. Stocks gained a few percentage points and then resumed the broader bull trend as the economy continued to expand.
‍

2013. Sixteen days during a fight over health care. The index advanced during the event and hit a high as it ended. The economy continued to expand, and the Federal Reserve maintained easy policy.
‍

2018 and 2019. Thirty-five days, the prior record. The market rallied strongly during the period as investors anticipated a pause in rate hikes and a later pivot to easier policy. The Congressional Budget Office estimated a modest but real hit to activity, much of which was later recouped.
‍

Today, 2025's shutdown. The current closure has surpassed the old record, now standing at 36 days. The direct economic drag remains small compared to the size of the economy, but the politics are becoming increasingly difficult to ignore, and the market context is becoming more extensive. That is the difference investors feel even as prices rise.

Commodities during Shutdowns

Gold. The current episode saw gold make new highs as the event began. Market commentary attributes the move to haven demand, to expectations for easier policy, and to data gaps that raise uncertainty. Historically, gold has often strengthened during shutdowns and then stabilized once a deal was reached, unless the macroeconomic message also shifted toward easier policy.

Copper. The metal has taken cues from China's activity, supply issues, and the dollar. Recent analysis suggests that copper has approached prior highs due to those global drivers, rather than the shutdown itself. Following a resolution, copper prices are expected to follow global manufacturing and power demand again.
‍

The Investor Lens

For a North American macro investor, the lesson is discipline.
‍

A shutdown by itself has rarely derailed a bull market.
‍

The risk rises when valuation is rich, leadership is narrow, and growth is slowing.
‍

Gold’s reaction says more about rates, the dollar, and policy credibility than it does about federal office closures.
‍

Copper’s reaction says more about the global cycle than it does about Congress.
‍

Equities may remain favorable if earnings continue to surprise on the upside and if policy turns more accommodative. Valuation alone does not end bull markets, but valuation can set the terms for the next drawdown. The shutdown is a headline. Liquidity, profits, and positioning are the real substance.
‍

Closing Thoughts

In every shutdown, the same question comes back. Does this matter for my portfolio? History has answered with a shrug. Prices often rise through the noise. This time might still prove the rule, not the exception. The difference investors feel today is not the closure itself. It is the length, the political tone, and the altitude of prices after a historic global run.
‍

If you invest with that frame, you keep your eye on spreads, the dollar, earnings revisions, and the policy path. Always a challenge, but looking beyond the tape often reveals the real story and how it is evolving.

‍