Goldman Sachs says a government shutdown would hit these stocks the hardest

Published Thu, Sep 23 202111:54 AM EDTUpdated Thu, Sep 23 202112:45 PM EDT

As a debt limit showdown brews in Washington, history shows certain stocks could be hit hardest if a government shutdown occurs. Congress must pass a funding plan by Sept. 30 to prevent a government shutdown. The House passed a bill Tuesday that would temporarily fund the government and suspend the debt limit , but Republicans are threatening to block the legislation as it heads to the Senate. "With a potential government shutdown and debt limit showdown looming, investors are growing concerned about market spillovers," Goldman Sachs' David Kostin said in a note. Prior U.S. government shutdowns or debt ceiling showdowns had no consistent impact on the S & P 500, according to Goldman's analysis. "Rather, the underlying macro environment has been more important for equity performance," Kostin said. However, a group of stocks with high exposure to government revenue underperformed the mid-cap S & P 400 around the 2011 and 2013 debt limit deadlines, Goldman found. The basket comprises the stocks of 83 companies generating at least 20% of revenues from government spending. Take a look at the top eight names in the basket ranked by government revenue exposure. Industrial and health care stocks make up over 80% of the full basket, Goldman noted. Many industrial companies on the list relate to the aerospace and defense spending. Huntington Ingalls Industries at the top of Goldman's list is a major military shipbuilding company. Mercury Systems makes hardware and software products for aerospace and defense sectors. Lockheed Martin also works with aerospace, arms, defense, security and technology. These top three names generate 99% of revenue from government spending, according to Goldman's analysis. Booz Allen Hamilton also takes a top spot on Goldman's list. According to Goldman, 96% of the consulting firm's revenue comes from the government. The lone health care name in the top eight is Oak Street Health . The primary care provider serves Medicare recipients and adults over 65. Oak Street Health derives 98% of revenue from government spending, Goldman found. —CNBC's Michael Bloom contributed reporting.

Two Lockheed Martin F-35 Lightning II jets fly during a military aeronautical training exercise. Taken on 4 Sept. 2019.

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As a debt limit showdown brews in Washington, history shows certain stocks could be hit hardest if a government shutdown occurs.