U.S. stocks have struggled since the timeline for the Trump administration's pro-growth agenda came into question, but investors appear confident that next week's deadline that could shut down the federal government will not become another market hurdle.
A new spending bill, or an extension of the current one, needs to pass next week to keep the government from running out of cash and having to partially shut down. Funding for a proposed border wall with Mexico or stripping federal resources from so-called sanctuary cities are among the thorny issues.
In a note to clients on Wednesday, Goldman Sachs put the odds of a shutdown at only one-in-four when April draws to a close, with the risk rising to about 30 percent if lawmakers pass an extension and stall the debate into May.
Investors have worried of late that a shift in the Trump administration's focus to foreign policy could further delay legislation already in doubt after a much-heralded healthcare bill sank in Congress a month ago. However, options activity shows little concern that legislation could suffer even more over a shutdown.
The CBOE Volatility Index, an options-based measure of how much traders are willing to pay for protection against a sudden drop in the S&P 500, shows little fear over a near-term shock to stocks.
The VIX, which rose to a five-month high of 16.28 on Monday amid rising geopolitical risks, has been quick to retreat. It fell 0.78 point to 14.15 on Thursday.
The relative calm is shared among many investors.
"No one thinks the government is going to shut down or that that is something you would worry about as an investor," said Rick Meckler, president of LibertyView Capital Management in Jersey City, New Jersey. "It would be a real surprise to the investment community."
But some are not as optimistic. Reports Thursday that a new healthcare bill could be sent to the floor next week would leave even less time to hammer out a spending bill deal in time.
A shutdown could then further delay the implementation of Trump's policies that largely fueled the post-election stock market rally.