Dow hits record high amid US shutdown risk

The Dow Jones Industrial Average was up 0.2% at 46,397.89, a new record

The Dow closed at a new record Tuesday as markets largely shrugged off the likelihood of a partial US government shutdown due to a stalemate on budget talks.

Major US equity indices veered in and out of negative territory throughout the day before closing in the red. The Dow Jones Industrial Average was up 0.2% at 46,397.89, a new record.

Several federal government operations will freeze beginning at midnight Tuesday night if there is no breakthrough. Talks between congressional leaders and President Donald Trump concluded Monday without progress.

The market seems to be ignoring the fact that we’re looking at a potential shutdown, said Art Hogan of B. Riley Wealth Management.

Analysts say a shutdown will not significantly affect the US economy unless it is prolonged. While some activity would be curtailed, the expectation is that there would be a bounce when the government reopened.

But a closure would delay the release of economic data, including the September jobs report, which is supposed to come out Friday.

Usually, markets ignore shutdowns – most last only a few days and investors seem to take a long-term view of the situation, and the short duration of most incidents has little impact on company profits, said Neil Wilson, investor strategist at Saxo.

But it could be different this time, Wilson warned. Deep political divisions could see this drag on. A longer shutdown could have serious consequences for stocks.

He pointed to the White House threatening mass firings, while recent changes to economic policy added to uncertainty and raised the prospect of a potential recession.

The latest Dow record extends a heady period for US equities that has seen all three major indices post new records during the third quarter, which ended with Monday’s session.

Analysts have pointed to bullishness around artificial intelligence and optimism around US central bank interest rate cuts as among the factors driving equities higher.

However, there has been some weakening in economic data. The Conference Board’s consumer confidence index slid 3.6 points to 94.2 in September. The figure, the lowest since April, reflects increased concerns about inflation.