US Stocks Rally as Lawmakers Near Deal to End Government Shutdown
Major indices surge on signs of an end to the 41-day impasse that has weighed on economic growth and investor sentiment.
U.S. stocks surged in Monday trading as investors reacted positively to signs that lawmakers in Washington are closing in on a deal to end a record-long government shutdown that has hampered economic activity and created weeks of market uncertainty.
Optimism for a breakthrough sent the S&P 500 up as much as 1.2% in morning trading, while the tech-heavy Nasdaq Composite led the gains with a jump of nearly 2%. The Dow Jones Industrial Average also climbed approximately 0.7% as markets priced in a potential end to the 41-day political standoff.
The broad-based rally signaled a collective sigh of relief from Wall Street, which has watched the prolonged closure with growing concern. The shutdown, the longest in U.S. history, is estimated to have already cost the U.S. economy around $55 billion in lost output, shaving as much as 0.8 percentage points off quarterly GDP growth, according to economic analyses.
"Investors are breathing easier as it looks like the political deadlock is finally breaking," said a senior market analyst. "The shutdown has been a significant drag on growth and a source of unnecessary economic friction. This is a classic relief rally."
The market's advance was powered by strong performance in sectors most sensitive to economic optimism. Technology giants including Nvidia and Meta were among the top performers, alongside airline stocks like American and United Airlines, which had faced the prospect of travel disruptions and reduced demand.
However, the optimism was not universal. Health insurers such as Cigna and Humana saw modest declines, with investors reportedly concerned about potential changes to healthcare tax subsidies being negotiated as part of the broader spending package, according to reports from Forbes.
Progress on a potential deal was first signaled over the weekend, with Senate leaders from both parties indicating a resolution could be days away. While the precise details of the agreement are still being finalized, the movement was enough to reassure investors that the economic damage would not be allowed to escalate further. A Bloomberg report on Monday morning confirmed that a deal was advancing in the Senate, reinforcing market confidence.
The shutdown, which began on October 1, has furloughed hundreds of thousands of federal workers and delayed critical government services and payments, creating ripples across the economy. Economists have warned that a protracted closure risked damaging consumer confidence and disrupting business investment.
Jonathan Pingle, chief U.S. economist at UBS, recently described the shutdown as a "huge inconvenience" and a clear "drag on growth." The market's sharp, positive reaction underscores how significant that drag has been on investor psychology.
As Washington moves closer to restoring full government funding, investors will likely shift their focus back to fundamental economic data, corporate earnings, and Federal Reserve policy. The key question will be how quickly the economy can recover from the self-inflicted wound of the past month and a half.