Stocks face earnings test with S&P 500 on pace for worst performance in a shutdown since 1990

Stocks Brace for Earnings Test: S&P 500 Faces Worst Shutdown Slump Since 1990

As the U.S. government shutdown drags into its 12th day, Wall Street is navigating a perfect storm of uncertainty—tariff threats, delayed data, and an earnings season that could make or break the S&P 500’s record run.On October 12, 2025, MarketWatch reported the S&P 500 (SPY) is on track for its worst performance during a government shutdown since 1990, down 2% since October 1 amid tariff fears and a data blackout. This S&P 500 shutdown performance 2025 narrative fuels trending searches like stocks earnings test 2025, S&P 500 government shutdown impact, tariff fears stock market, Wall Street banks earnings Q3, and market volatility October 2025. With SPY at $653.02 (per the finance card above), down from a high of $673.95, investors are jittery. Let’s unpack the chaos, from bank earnings to historical patterns, and what it means for U.S. portfolios.

The Shutdown Sting: Why This Time’s Different

The shutdown, sparked by Congress’ failure to pass 2026 fiscal funding, has furloughed 900,000 federal workers and delayed key data like the CPI inflation report (pushed to October 24). President Trump’s October 10 threat of “massive” Chinese tariffs—potentially 60%—wiped out SPY’s weekly gains, sending it from $671.16 (October 9 close) to $652.15 by October 10’s close, a 2.8% drop. The finance card above shows SPY’s October 10 intraday low of $652.84, reflecting tariff jitters.Historically, the S&P 500 shrugs off shutdowns, gaining 0.3% on average during 22 closures since 1976 and 13% in the year after, per Carson Group. The 2019 shutdown saw a 10% rally during its 35 days. But 2025’s mix—tariffs, no jobs report, and stretched valuations (SPY’s year-high $673.95)—makes this dip the worst since 1990’s 3% slide.

Earnings Test: Banks Under the Microscope

Q3 earnings kick off this week, with Wall Street giants like JPMorgan Chase (JPM), Wells Fargo (WFC), Citigroup (C), and Goldman Sachs (GS) reporting Tuesday, followed by Bank of America (BAC) and Morgan Stanley (MS) Wednesday. Analysts have raised Q3 estimates, with State Street’s Michael Arone “uncomfortably bullish” but warning of a “small margin for error” given high valuations.

• JPMorgan (JPM): Expected to show loan growth but faces tariff-related trade concerns; down 1.52% recently.
• Goldman Sachs (GS): Poised for capital markets gains ($779.96 current, $805 target), but UBS flags selectivity post-rally.
• Wells Fargo (WFC): Down 2.84%, with middle-market lending in focus.

These reports are critical: Banks offer a window into consumer health and trade impacts, especially with tariffs looming. A miss could tank SPY further; beats might spark a rebound.

Market Sentiment: Experts and X Weigh In

Analysts are split. J.P. Morgan’s David Kelly sees tariffs as the real threat, inflating core goods prices amid CPI delays. Deutsche Bank’s Jim Reid notes SPY’s resilience, up during the last six shutdowns, but cautions on prolonged gridlock. On X, @KobeissiLetter highlights SPY’s 55% chance of closing higher post-shutdown but flags 1970s-80s downturns. @CharlieBilello celebrates SPY’s 0.4% gain and three record highs this shutdown, per October 6 posts.X users are vocal: #SP500Shutdown trends with “Tariffs killing gains—Trump’s gotta chill” (20K likes), while r/investing debates “Buy the dip or brace for Q4 crash?” with 60% leaning bullish.

U.S. Impact: From Wall Street to Main Street

For American investors, this is a gut-check. SPY’s 14.8% YTD gain (from $568.64 in October 2024 to $653.02) faces risks, per the finance card above. Retail portfolios—401(k)s heavy in SPY ETFs—could wobble if earnings disappoint or tariffs bite. Economically, furloughs cut consumption (2019’s $30T economy barely flinched, but 2025’s $32T feels shakier).Lifestyle hit? Shutdowns disrupt federal services—think delayed VA benefits or park closures—pinching travel plans for families. Politically, Trump’s tariff push fuels GOP-Dem blame games, echoing X’s #GovernmentShutdown debates. Tech angle? AI trading bots, like those at BlackRock, lean on earnings over shutdown noise, stabilizing SPY’s dips.

Outlook: Volatility or Victory Lap?

The S&P 500 shutdown performance 2025 saga—down 2% since October 1—marks a rare stumble, with SPY at $653.02 (finance card above) facing earnings pressure. Historical resilience (13% post-shutdown gains) offers hope, but tariffs and data gaps cloud Q4. Bank earnings could pivot SPY toward $670 or sink it to $640, per UBS models.For U.S. investors, it’s a moment to diversify—tech and healthcare ETFs hedge bank risks. As Wall Street braces, one thing’s clear: The earnings test will set the tone. Stay sharp, check the finance card above, and watch those bank reports.stocks earnings test 2025, S&P 500 government shutdown impact, tariff fears stock market, Wall Street banks earnings Q3, market volatility October 2025, SPY shutdown performance, JPMorgan earnings 2025, Goldman Sachs stock outlook, U.S. economy shutdown effects, S&P 500 worst shutdown since 1990