Wall Street closed sharply higher on Monday, led by big gains in Nvidia, Palantir and other major AI-related companies, following progress in Washington to end a record government shutdown.
The longest government shutdown in U.S. history could end this week after a compromise to restore federal funding cleared a first hurdle in the Senate late Sunday, although it was unclear when Congress would give final approval.
“The government shutdown continued much longer than people expected. There were concerns about the economy, about the possibility of flights being canceled and about the broader impact on the economy,” said Chris Zaccarelli, chief investment officer at Northlight Asset Management.
Large-cap technology stocks recovered from some recent losses. Last week, the S&P 500 technology sector index fell 4.2%.
Nvidia, the most valuable company in the world, rose 5.8%. AI data analytics firm Palantir jumped 8.8% and Tesla rose 3.7%.
“This is a rebound after being slightly oversold last week. It’s another example of the ‘buy the dip’ mantra really acting quickly in the tech and AI space,” said Ross Mayfield, investment strategy analyst at Baird in Louisville, Kentucky.
“There’s nothing structural that affects the AI theme. In fact, a lot of the earnings reports have been really strong in that sector.”
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The S&P 500 rose 1.54% to close the session at 6,832.43 points. The Nasdaq gained 2.27% to 23,527.17 points, its biggest single-day percentage gain since May 27. The Dow Jones Industrial Average rose 0.81% to 47,368.63 points.
The small-cap Russell 2000 gained 0.9%, while the PHLX semiconductor index rose 3%.
Volume on U.S. exchanges was relatively light, with 17.9 billion shares traded, compared with an average of 20.8 billion shares over the previous 20 days.
Airlines came under pressure as government-led flight cuts and air traffic control staff furloughs disrupted air travel in the U.S. United Airlines fell 1.3% and American Airlines fell 2.5%.
On betting website Polymarket, the probability that the government shutdown will end this week stood at 88%.
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The longest federal shutdown in history has created a data gap for both the Federal Reserve and the markets, leaving them dependent on private data that has given a mixed picture of the economy.
Some Fed officials reiterated their caution about deciding monetary policy at the central bank’s next meeting, while Fed Governor Stephen Miran repeated his call for a big rate cut.
Optimism around artificial intelligence has fueled a bull market in US stocks this year, but concerns about monetization and circular spending within the sector led to a sell-off recently. The Nasdaq marked its worst performance in more than seven months last week.
Meanwhile, the third quarter earnings season is almost complete. Of the 446 S&P 500 companies that have reported, 83% have delivered better-than-expected earnings, according to data compiled by LSEG.
Health insurer stocks fell after the U.S. Senate reached a deal to end the 40-day federal shutdown without extending Affordable Care Act subsidies, instead setting up a December vote on the issue.
Centene was down 8.8%, Humana was down 5.4%, and Elevance Health was down 4.4%.
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Metsera fell 14.8% after Pfizer won a $10 billion bidding war to acquire the company.
Eli Lilly rose 4.6% to an all-time high after Leerink Partners upgraded its rating on the stock.
Advancing issues outnumbered decliners in the S&P 500 by a 1.7-to-1 ratio.
The S&P 500 recorded 32 new highs and 8 new lows; The Nasdaq recorded 106 new highs and 128 new lows.
With information from Reuters.
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