The latest news out of Washington points to a political resolution that should avoid a shutdown of the Federal government.

But what if?

There have been 17 government shutdowns due to budget gaps since 1976.  The table below shows how the S&P 500 performed surrounding the shutdowns.

These were usually very temporary affairs, lasting a median of only 3 days...and during the past 30 years, only one lasted longer than a week.

There wasn't too much of a negative impact during the bluster leading up to the shutdown, with the S&P performing about in line with random.  But during the shutdown, stocks were a bit weaker.

Ironically, the market's worst performance was during the "Hooray, we saved the government!" period of the week following the shutdown.  It was positive only 35% of the time, with an average return of -0.2.%.  Six of the last eight were negative during that span.

By a month later, the market was back to normal, sporting a healthy average return and percentage of time positive, both a bit higher than what we see randomly.  Overall, there doesn't seem to be too much to worry about, at least according to historical reactions.