Wall Street is watching for developments in Washington, D.C. Friday after Thursday's failed attempt to avert a government shutdown. Some stocks remain wobbly as the day wears on and a midnight deadline approaches.

What Happened: The House turned down a contingency plan proposed by Speaker Mike Johnson (R-La) only hours before the vote Thursday. The proposal failed to secure the necessary two-thirds majority.

Backed by President-elect Donald Trump, the funding bill ran into trouble mainly from Democrats due to its inclusion of a two-year debt limit suspension. The bill would have maintained government funding at existing levels through mid-March, suspended the debt limit for two years and allocated approximately $100 billion in disaster relief and about $10 billion for farmer economic assistance.

Market Movement, Sectors Affected

Defense Sector: Companies in the defense industry, such as Lockheed Martin (NYSE:LMT) , Northrop Grumman (NYSE:NOC) and L3Harris Technologies (NYSE:LHX) often depend heavily on government contracts. During a shutdown, delays in contract awards and payments can occur, potentially impacting cash flow and stock performance.

Health Care Sector: Firms that receive substantial revenue from government health care programs, like Medicare and Medicaid, might experience payment delays during the shutdown. This could affect companies such as UnitedHealth Group (NYSE:UNH) and Humana (NYSE:HUM).

Aerospace Sector: Aerospace companies that rely on federal contracts or regulatory approvals could face delays, potentially affecting their operations and stock prices. These stocks include Lockheed Martin and Boeing (NYSE:BA)

Consumer, Retail Sectors: A shutdown can lead to furloughs for federal employees, resulting in delayed paychecks. This reduction in disposable income may decrease consumer spending over the holidays, adversely affecting retail companies and consumer goods manufacturers.

Financial Sector: Government shutdowns can delay economic reports and data releases, creating uncertainty in financial markets. Naturally, this uncertainty could lead to increased market volatility, impacting financial institutions and investment firms.

Holiday Travelers, Take Note

With the busy holiday season upon us and the Transportation Security Administration expecting to screen up to 40 million air travelers in the coming weeks, air traffic controllers and essential airport workers could be doing their jobs without the prospect of a paycheck.

Before the Capitol moved closer to a shutdown, the AAA predicted over 119 million people would hit the roads over the holidays, noted the NY Times. If no funding solution is reached by midnight, the already crowded highways could be even more so as planes and trains fill up or, worse, face cancellations. No matter what happens in D.C., Amtrak is expected to keep the trains running on schedule.

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