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Illustration: Lazaro Gamio/Axios

The Dow closed higher for the week on Friday for the fifth straight time. But rather than celebrate the market's remarkable bounce-back since its Christmas Eve nadir, investors have publicly focused on what has or could go horribly wrong.

What they're saying: "The idea that there will be a global recession, either this year or next, is now close to consensus," analysts at Fathom Consulting wrote in a note published after Friday's market close.

Interestingly, the flow of dollars has told a different story.

  • Fathom's comments came just a day after data from Rifinitiv/Lipper showed investors had injected $5.8 billion into ETFs and mutual funds for the week, with the majority going to equity funds.

What it means: While they're continuing to buy stocks, fund managers and analysts are beginning to worry out loud that the partial government shutdown that ended on Friday — at least temporarily — will come back to haunt the market.

  • "While the S&P 500 index is up more than 5 percent since the start of January, money managers including Federated Investors, Baron Funds and Hodges Capital Management are bracing for a powerful knock-on effect on the consumer," Reuters reported Friday.
  • "The market right now is treating this like a hurricane, where you know there will be an economic impact but you tend to discount any hit to the data because you know there will be some catch up," Steve Chiavarone, a portfolio manager at Federated Investors told Reuters. "But here's what's dangerous about that approach: the sample size is zero for shutdowns this long."

The shutdown left around 800,000 federal workers without pay for 35 days, and U.S. consumer confidence fell by the most in three years this month.

  • "The sentiment-driven rebound, or buying justified by the argument that the selloff went too far, is coming to an end," Dennis Debusschere, the head of portfolio strategy at Evercore ISI, wrote in a note to clients. "Another sharp decline remains a low probability event, but new energy is needed to push the market meaningfully higher near term."

Go deeper: Shutdown estimated to cost U.S. economy $3.6 billion so far

Go deeper

Updated 43 mins ago - Science

Nor'easter slams East Coast with flooding rain and powerful winds

A residential area in Middlesex County as floodwater from the nor'easter covers streets in New Jersey on Tuesday. Photo: Tayfun Coskun/Anadolu Agency via Getty Images

A monster storm was slamming the Northeast with record rainfall and powerful winds over Tuesday night — causing flash flooding that resulted in people having to be rescued in New Jersey and New York roads to close.

Threat level: All of southern New England westward to New York City and northern New Jersey was under the threat of flash flooding and coastal flooding from the nor'easter through Tuesday night into early Wednesday, per the National Weather Service.

48 mins ago - World

Blinken speaks with Sudan prime minister after his release

Sudan's Prime Minister Abdallah Hamdok. Photo: Ebrahim Hamid/AFP via Getty Images

Secretary of State Tony Blinken spoke on the phone on Tuesday evening with Sudan’s Prime Minister Abdalla Hamdok after the military released him from custody.

Why it matters: Hamdok’s release was a result of pressure on Sudan’s military leader General Abdul Fattah al-Burhan from the U.S. and other countries but also from the different political parties in Sudan and massive protests in the streets.

Updated 4 hours ago - World

Brazil senators vote to recommend criminal charges for Bolsonaro

Brazilian senators vote on probe into President Bolsonaro's handling of pandemic. Photo: Gustavo Minas/Bloomberg via Getty Images

A Brazilian Senate committee Tuesday voted to approve a report recommending President Jair Bolsonaro be charged with a raft of criminal indictments, including crimes against humanity over his response to the COVID-19 pandemic, per AP.

Why it matters: Bolsonaro has become the face of a right-wing approach to the pandemic that includes repudiating vaccines and masks and resisting lockdowns and other mitigation measures. The Senate report holds him personally responsible for half of the country's 600,000 deaths.

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