Key Takeaways
- Major US indices surged with Nasdaq gaining 448 points (1.95%) and S&P 500 rising 1%
- Breakthrough in 40-day government shutdown standoff fueled market optimism
- Bipartisan deal reached to fund government operations through January
US stock markets recorded significant gains on Monday as investor sentiment turned positive following a breakthrough in the prolonged government shutdown standoff. The development sparked hopes of economic data resumption and potential Federal Reserve rate cuts.
Market Performance Highlights
At 8:50 PM IST, the Dow Jones was trading up 115 points (0.25%) at 47,103. The Nasdaq Composite jumped 448 points (1.95%) to reach 23,452, while the S&P 500 gained 1% to trade at 6,804.
Government Shutdown Breakthrough
A group of Senate Democrats joined Republicans in a procedural vote on Sunday evening, clearing the path for formal debate after a bipartisan deal was reached to fund government operations through January. “If all goes well, some federal agencies could reopen as soon as Friday,” said David Morrison, senior analyst at Trade Nation.
“The more risk-on mood means it’s pretty much a sea of green on the boards,” Neil Wilson, UK Investor Strategist at Saxo told AFP.
Economic Implications
The government reopening could bring much-needed clarity on US inflation and the soft labour market, both critical to the Federal Reserve’s plans for potential interest rate cuts next month. Morrison noted that both investors and the Fed have been “flying blind since the beginning of October, with a near-complete absence of data.”
Morrison added, “Fed Chair Jerome Powell has played down the prospect of another rate cut in December, as it is far from obvious that inflation has peaked.”
Additional Market Drivers
Optimism was further boosted by Pfizer’s reported $10 billion victory in the bidding war for biotech obesity specialist Metsera over the weekend. Wall Street opened higher following a week of losses sparked by worries that the AI investment boom had inflated tech valuations to unsustainable levels.
European markets also climbed, mirroring gains in Asia. Tensions between the US and China eased further after Beijing announced a one-year suspension of “special port fees” on US vessels, coinciding with Washington’s pause on levies targeting Chinese ships.
In currency and commodity markets, the dollar steadied against the euro and pound while rising against the yen. Oil prices gained slightly after last week’s decline amid concerns over supply and global demand uncertainties.
