Dow falls nearly 200 points to start October even after Congress averts government shutdown: Live updates

Stocks were lower Monday even after U.S. legislators were able to come to a short-term agreement that staved off a government shutdown.

The Dow Jones Industrial Average declined 172 points, or 0.5%. The S&P 500 traded down 0.4%, while the Nasdaq Composite rose 0.2%.

The small-cap focused Russell 2000 fell 1.6% on Monday, pulling it down 0.3% year to date. This marked the first time the index turned negative in 2023, underscoring trouble among small cap names. The Russell 2000 is often thought of as a better insight into the health of the broader economy due to its focus on smaller businesses.

Discover was the S&P 500’s top gainer Monday, with shares up 5.3%. Health-care company Viatris and DXC Technology rose 3.5% and 3%, respectively. Cryptocurrency-related stock Marathon Digital advanced 4.2% as crypto prices rallied.

Technology and communications services were the only positive sectors in the broad market index. Communication services added 1.2%, while the tech sector traded 1% higher.

The Senate passed a continuing resolution with just hours to spare before a midnight deadline Saturday, which was then signed by President Joe Biden into law. The bill keeps the government open through mid-November, an extended period that lawmakers can use to finalize funding legislation.

Historically, the market “has not cared” about government shutdowns, according to Charles Schwab senior investment strategist Kevin Gordon. He noted that the average gain for the S&P 500 from the start to the end of a shutdown has been “basically flat” in the past.

“I think the conditions that we’re in and that sort of surround us are much more important. So as we head into the year-end, if [we] don’t see an improvement in key areas of the economy, like housing and like manufacturing, if [we] start to see more cracks on labor I think that would that would definitely take on more importance than just the shutdown itself,” said Gordon.

Sentiment was dampened, however, as investors feared lawmakers were headed for another shutdown fight eventually as Saturday’s agreement did not address brewing disagreements on overall government spending levels, the border and Ukraine.

The yield on the 10-year Treasury jumped more than 12 basis points to 4.695% Monday, as investors sold off safe-haven Treasurys following the news of the averted shutdown.

September marked the worst monthly performance of the year for the S&P 500 and Nasdaq Composite. The three major averages all finished the quarter in the red.