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ZURICH – A U.S. government shutdown could spook investors and is the biggest threat to the stock market rally, according to Nobel prize-winning economist Joseph Stiglitz.

Politicians are facing a Friday deadline to agree a new spending bill and avert a shutdown. President Donald Trump blew up negotiations on a potential immigration deal last week, pushing Republicans and Democrats to harden their positions and raising the risks that the standoff will sink the budget talks.

“The most significant political risk is the United States,” Stiglitz said in a telephone interview. “Uncertainty is bad for the global economy. And among the uncertainties are these government shutdowns, which would be probably very bad for the markets.”

That could undermine the rally in stocks that has seen the S&P 500 Index rise every day bar one so far this year, extending a 19 percent gain in 2017.

Stiglitz is heading to Switzerland for the annual World Economic Forum, which starts on Jan. 23 in Davos, making a stop in Zurich for a conference on finance and sustainability this week. The Columbia University professor also sees potential for trouble when the euro area eventually moves off sub-zero interest rates.

“The process of returning to what would be called a more normal interest rate I think poses some very big challenges, particularly for Europe,” he said. “The market seems to assume that there won’t be any problems in returning interest rates to more normal levels,” but countries with high debt ratios like Italy could face “enormous strain” on budgets, he said. “And within the confines of the euro, it’ll be difficult to address that.”

As for environmental risks, their costs, such as the damage done by hurricanes and flooding, have already become “palpable” in the U.S., according to Stiglitz.

“Not dealing with climate change is extraordinarily costly,” he said. While some companies might find themselves worse off as countries increasingly go green, “I think most of the firms will find more new opportunities than extra costs.”