Stocks rallied and yields rose as optimism that U.S. lawmakers are moving closer toward a deal to end the government shutdown spurred demand for risky assets.
S&P 500 futures advanced 0.9% after a group of Senate Democrats broke with their party to help Republicans move forward on a funding bill. Nasdaq 100 contracts climbed 1.5%. Nvidia Corp. rose more than 3% in premarket trading, leading gains among the Magnificent Seven tech stocks.
“Markets are taking very positively to the news of the potential resolution of the U.S. shutdown,” said Marija Veitmane, head of equity research at State Street Global Markets. “We were very constructive on the market anyway and we saw last week’s selloff as a little bit of a buying opportunity.”
The risk-on mood spread across markets, lifting oil, metals and Bitcoin. Europe’s Stoxx 600 was on track for its biggest gain since June. US Treasuries fell across the curve, pushing the 10-year yield up four basis points to 4.13%. Gold also advanced on prospects of a Federal Reserve rate cut next month.
With the third-quarter reporting season nearly complete, profits are rising at their fastest pace in four years, keeping strategists upbeat on the outlook.
Strategists at UBS Group AG expect the S&P 500 to climb to 7,500 next year on the back of solid earnings growth, implying an 11% gain from current levels. Their peers at Morgan Stanley, meanwhile, see clear signs of a recovery in corporate profits.
How soon the shutdown will end remains uncertain. The Senate has yet to schedule a final vote, while the measure must also pass the House before reaching President Donald Trump for his signature.
“It’s only the opening act in what could still be a drawn-out political drama, but investors are seizing on any sign of progress,” said Ipek Ozkardeskaya, a senior analyst at Swissquote. “They need to understand where the US economy stands, where inflation and jobs are headed and what the Fed should do next.”
On Monday, Taiwan Semiconductor Manufacturing Co. reported slower monthly revenue growth, underscoring uncertainty about the sustainability of the AI boom.
The near-term resumption of economic data releases may also reveal a less rosy picture than expected, while the quality of inflation reports could be in doubt after the Bureau of Labor Statistics halted in-person data collection.
“What I’m really watching at the moment is the data for jobs and the risk of negative newsflow on that front,” said Fabien Benchetrit, head of target allocation for France and southern Europe at BNP Paribas Asset Management. “The second major risk moving forward is that the massive capex deployed on AI doesn’t deliver the expected boost in sales and earnings.”
Stocks
- - S&P 500 futures rose 0.9% as of 8:24 a.m. New York time
- - Nasdaq 100 futures rose 1.5%
- - Futures on the Dow Jones Industrial Average rose 0.4%
- - The Stoxx Europe 600 rose 1.4%
- - The MSCI World Index rose 0.3%
Cryptocurrencies
- - Bitcoin rose 1.5% to $106,084.23
- - Ether rose 0.4% to $3,596.83
Bonds
- - The yield on 10-year Treasuries advanced four basis points to 4.13%
- - Germany’s 10-year yield advanced one basis point to 2.68%
- - Britain’s 10-year yield advanced one basis point to 4.48%
Commodities
- - West Texas Intermediate crude rose 0.5% to $60.03 a barrel
- - Spot gold rose 2.5% to $4,102.88 an ounce
This story was produced with the assistance of Bloomberg Automation.
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