New York
 — 

Stocks were set to open lower on Wednesday as the US government officially entered a shutdown and Wall Street grappled with the uncertain implications for the economy.

Dow futures were down 219 points, or 0.47%. S&P 500 futures fell 0.5% and Nasdaq 100 futures slipped 0.6%.

The government at midnight officially shut down for the first time in seven years after lawmakers failed to agree on a funding bill.

The gridlock on Capitol Hill is set to put many federal employees out of work indefinitely, in addition to stoking uncertainty about the fate of regularly scheduled releases of key government data.

History shows that the stock market tends to be largely unaffected by government shutdowns. Since 1976, there have been 20 government shutdowns, with an average length of eight days each, according to Adam Turnquist, chief technical strategist at LPL Financial.

In the one- and three-month periods after each of the shutdowns ended, the S&P 500 gained an average of 1.2% and 2.9%, respectively, Turnquist said in a note.

“Investors have generally looked past budget-related disruptions, prioritizing corporate earnings, broader economic trends and other key macroeconomic factors,” Turnquist said.

“However, sectors that depend heavily on government contracts — such as defense and life sciences — can be more sensitive to shutdowns,” he added.

Stocks are coming off a historically strong September. The S&P 500 rose 3.5% across the month, posting its strongest gains in September since 2010. The Dow hit a record high on Tuesday ahead of the government shutdown.

Some investors have said there are unique risks associated with a shutdown this time because of heightened attention to economic data, along with concerns that investors and companies could be left in the dark without reliable information about the economy if the shutdown lasts for an extended period of time.

“We believe that a shutdown will have only a small and transitory economic impact, but it may spur some financial market volatility, especially if delays in government economic reports obscure the path of Federal Reserve interest-rate cuts,” Jennifer Timmerman, investment strategy analyst at Wells Fargo Investment Institute, said in a note.

The market is being relatively sanguine and overlooking risks associated with a government shutdown, according to Keith Buchanan, senior portfolio manager at Globalt Investments.

“We don’t think that the market appreciates the risk of a stickier, more contentious shutdown,” Buchanan said. “We don’t feel like the market is appropriately pricing the risk of this getting worse than it has in the past.”

The S&P 500 is coming off of five months of gains in a row. US stocks have climbed higher despite concerns about geopolitical uncertainty, renewed tariff threats and faltering consumer sentiment.

Eric Teal, chief investment officer at Comerica Wealth Management, said he does not the think shutdown will prove to be an issue for stocks.

“I think it’s more of a political event than a market event,” Teal said.

Corporate earnings continue to beat expectations, providing enough fuel for the market rally to continue at least until investors parse through third quarter earnings results in the coming months, Teal said.

Indeed, corporate America’s profits have yet to display signs of slowing down, defying expectations and providing fuel for stocks to climb higher. Stocks have also rallied on optimism about the Fed cutting interest rates.

Fed rate cuts can lead to lower savings rates and borrowing costs, encouraging consumer spending, investing and business activity, providing a sustained tailwind for stocks.

“We advise investors to look past shutdown fears and focus on other market drivers, such as the mix of continued Fed rate cuts, strong corporate earnings and robust AI capex and monetization,” Ulrike Hoffmann-Burchardi, global head of equities at UBS Global Wealth Management, said in a note.

While stocks are hovering near record highs, a surge in gold and silver prices is also signaling concern about lingering political and economic uncertainty. Gold and silver prices rose on Tuesday ahead of the shutdown and were also higher Wednesday.

“[The] government shutdown has investors gravitating toward safe-haven assets,” José Torres, senior economist at Interactive Brokers, said in a Tuesday note.