On Monday night, stock futures were hovering near the flatline following a robust start to the trading week. Futures associated with the Dow Jones Industrial Average edged down by 11 points, or 0.02%, while both S&P futures and Nasdaq 100 futures experienced minimal declines of less than 0.1%.
Earlier in the day, major U.S. indexes saw a significant upswing, largely buoyed by optimism surrounding what appears to be the impending conclusion of a prolonged U.S. government shutdown. The Nasdaq Composite in particular celebrated its best trading day since May 27, posting a remarkable gain of approximately 2.3%. This surge was driven by a renewed interest in artificial intelligence stocks after a sell-off the previous week.
The Senate is anticipated to initiate voting on a compromised federal funding agreement Monday evening. This proposed deal aims to reopen the government until January and mitigate some of the recent mass layoffs affecting federal workers. Notably, the agreement falls short of incorporating a Democratic push to extend the Affordable Care Act subsidies; instead, it suggests a vote on these tax credits set for December.
In the previous trading session, investors flocked to various risk-on assets that had contributed to market declines the week prior due to rising concerns regarding the durability of the AI sector and the overall health of the U.S. economy. Nvidia emerged as a standout performer, soaring 5.8% on Monday, and accounted for more than a quarter of the total upside in the S&P 500. Additionally, Alphabet, Google’s parent company, saw a 4% increase, while Microsoft managed a 1.9% rise, breaking an eight-day losing streak.
Market analysts are viewing the prospective end of the government shutdown as a significant relief, reducing uncertainty for both financial markets and the economy. Sonu Varghese, a global macro strategist at Carson Group, expressed that the resolution of the shutdown alleviates potential risks, particularly as the economy approached a point where the shutdown could have longer-lasting consequences, such as delayed paychecks and reduced consumer spending. Furthermore, he highlighted that the reopening of the government would facilitate the release of macroeconomic data, ensuring that the Federal Reserve will not proceed into its December meeting without crucial information.
