US stocks rallied Monday as investors glimpsed a potential end to the longest government shutdown in history.
The Dow Jones Industrial Average jumped 390 points, or 0.8%, while the S&P 500 and Nasdaq rose 1.6% and 2.4%, respectively.
Eight Democratic senators broke with their party to end debate on a deal that would keep the government funded through January 30, 2026.
The Senate could vote as early as Monday on final passage of the deal, but the House of Representatives will not be back in session until Wednesday, so the shutdown will likely last a few more days.
Investor optimism still soared on hope for a deal to end the shutdown – the longest in history at just over 40 days.
Tech stocks – especially AI firms – led Monday’s rally.
Shares in Jensen Huang’s Nvidia jumped 6.2% while Broadcom rose 3%.
Shares in Palantir soared 9% after the stock took a beating the previous week on fears that AI potential had been vastly overestimated.
Firms like Microsoft, Amazon, Meta and Alphabet are slated to spend hundreds of billions of dollars on AI-related capital expenditures just this year – causing some investors to panic that the AI race has grown reminiscent of the “dot-com bubble” of the 1990s.
But news of a potential end to the shutdown pushed investors to take on more risky investments.
Microsoft rose 2% on Monday, on track to break an eight-day losing streak – its longest streak of daily declines since 2011.
Over the past week, the tech-heavy Nasdaq had suffered its worst week since President Trump’s “Liberation Day” tariffs sparked a massive sell-off in April.
The S&P 500 and 30-stock Dow each lost more than 1% over the week, as well.
The deal to end the government shutdown includes future protections for government workers, but it does not include an extension of Obamacare tax credits – the main sticking point in the debate between Dems and GOPers.
However, it would call for a vote on the subsidies in December.
The Senate and House will need to hold final votes on the funding bill.
House Speaker Mike Johnson (R-La.) has started pushing representatives to return to DC to speed along the voting process.
Concerns about the government shutdown sent the monthly consumer sentiment figure to its lowest level in over three years, according to data released by the University of Michigan on Friday.
The reading of 50.3 marked a drop of 6.2% on the month and about 30% from this time last year – near the worst-ever level for consumer sentiment.
Along with worries about the shutdown, broader economic concerns regarding inflation remained top of mind for many Americans. Prices on everything from a cup of coffee and kids’ toys to living room furniture and Amazon deals have soared.
