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The Dow surged higher on Tuesday, bolstered by optimism that the US government shutdown might come to an end this week. The Dow gained 559 points, or 1.18%, and closed at a record high of 47,927.96. The broader S&P 500 gained 0.21%. Meanwhile, the tech-heavy Nasdaq Composite fell 0.25%. Stocks were mostly higher Tuesday after the Senate on Monday approved a funding measure to end the government shutdown. The bill now heads to the House for approval before being sent to President Donald Trump’s desk. “With the Senate passing the stopgap funding bill, it is likely that the government shutdown will end by the end of the week,” Mohit Kumar, chief economist and strategist for Europe at Jefferies, said in a note. Investors also rotated out of tech stocks on Tuesday and shifted into other sectors including health care, energy and consumer staples. That helped boost the Dow, which is less exposed to the tech and AI wave. Twenty-six out of 30 companies in the blue-chip Dow closed higher on Tuesday. A potential end to the government shutdown would also mean the subsequent release of key economic data on the job market and inflation that had been delayed. The return to regularly scheduled releases of data can also provide a boost of certainty and confidence for investors. In the last 15 government shutdowns going back to 1981, the S&P 500 has gained an average of 2.7% in the month after the government reopened, according to Sam Stovall, chief investment strategist at CFRA Research. José Torres, senior economist at Interactive Brokers, said in a note: “A finalized deal later this week is expected to drive stocks to stronger advances, as a significant economic risk is pushed to the rear-view mirror and replaced with improved prospects for the holiday season.” On the tech front, Nvidia shares (NVDA) fell 2.96% on Tuesday after SoftBank disclosed that it had sold its entire stake in the company. Shares in CoreWeave (CRWV), a cloud-computing company and star of the AI trade, fell 16.31% after the company’s guidance did not impress investors. Stocks were coming off a day in the green. The Nasdaq surged 2.27% on Monday and posted its best day since May as investors swooped in to buy the dip on tech stocks. The bond market was closed on Tuesday in observance of Veterans Day. CNN’s Fear and Greed index hovered in “fear” after trading in “extreme fear” last week. While the Nasdaq pulled back on Tuesday, some investors expect the rally to continue. “The Federal Reserve’s policy easing, robust corporate profits, and strong AI spending have been the key market drivers, in our view, and they should continue to support the equity rally,” Ulrike Hoffmann-Burchardi, global head of equities at UBS, said in a note.
