Wall Street’s major indices experienced gains on Monday, driven by optimism surrounding the potential end of the U.S. government shutdown. The shutdown, now the longest in history, has disrupted economic data releases and heightened concerns about the economy’s health. On Sunday, senators advanced a House-passed bill in a procedural vote, aiming to fund the government until January 30. If approved by the Senate and signed by President Donald Trump, the bill could mark a significant step toward resolving the impasse.
Chris Zaccarelli, Chief Information Officer at Northlight Asset Management, noted, ‘The prolonged shutdown exceeded expectations, raising fears about economic stability and potential flight cancellations, which could have broader economic repercussions.’ This sentiment contributed to last week’s bearish outlook on the tech sector, though most tech stocks rebounded on Monday. Nvidia surged 3.4%, while Alphabet and Meta Platforms rose 2.5% and 1.5%, respectively. Information technology and consumer discretionary sectors were the primary drivers of the S&P 500’s 0.71% gain.
However, Home Depot’s nearly 2% decline weighed on the Dow Jones Industrial Average, which edged up just 0.02%. The Nasdaq Composite outperformed, climbing 1.35%, buoyed by a 2.1% rise in the semiconductor index. Meanwhile, airlines faced pressure due to government-directed flight cuts and staffing shortages, with United Airlines and American Airlines both dropping over 1%.
The CBOE volatility index retreated from a three-week high, easing 0.8 points to 18.26. On betting platform Polymarket, the likelihood of the shutdown ending this week stood at 85%. The prolonged shutdown has left the Federal Reserve and markets reliant on private data, which has painted a mixed picture of the economy. Some Fed officials reiterated caution ahead of the central bank’s next meeting, while Fed Governor Stephen Miran advocated for a significant rate cut.
Despite optimism around artificial intelligence fueling a bull run in U.S. stocks this year, concerns about monetization and circular spending led to a tech selloff last week, marking the Nasdaq’s worst performance in over seven months. The third-quarter earnings season neared its conclusion, with 83% of the 446 S&P 500 companies reporting better-than-expected results, according to LSEG data.
Health insurers faced declines after the Senate’s deal to end the shutdown excluded an extension of Affordable Care Act subsidies, deferring the issue to a December vote. Centene led the losses, plummeting 8.5%, while Humana and Elevance Health each fell about 4%. In contrast, Eli Lilly shares hit an intraday record high, rising 4.9% following an upgrade by Leerink Partners.
Advancing issues outnumbered decliners on both the NYSE and Nasdaq, with the S&P 500 recording 20 new 52-week highs and seven new lows, and the Nasdaq Composite posting 75 new highs and 92 new lows.