Stocks Rally, Bonds Fall on Push to End Shutdown: Markets Wrap

(Bloomberg) — Stocks rallied and yields rose as optimism that US lawmakers are moving closer to a deal to end the longest government shutdown in history spurred demand for risky assets.

S&P 500 futures rose 0.9% after a group of Senate Democrats broke with their party on a procedural measure to help Republicans advance a funding bill. Nasdaq 100 contracts gained 1.5% after the underlying index suffered its worst week since April. Nvidia Corp. led gains among the Magnificent Seven tech stocks in premarket trading, rising more than 3%.

Monday’s optimistic tone offered relief after a volatile week, when worries over stretched valuations fueled a sharp selloff in tech stocks. Ending the shutdown would give investors greater clarity on key economic data such as jobs and inflation, helping to lift the fog around the outlook for interest rates.

“Markets are taking very positively to the news of the potential resolution of the US 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 three basis points to 4.12%. Gold also advanced on prospects of a Federal Reserve rate cut next month.

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.”

Despite the buoyant sentiment, some investors remain wary that volatility could linger amid falling consumer confidence, jitters in debt markets and ongoing questions over tech valuations. The near-term resumption of economic data releases may also reveal a less rosy picture than expected.

“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 don’t deliver the expected boost in sales and earnings.”

Corporate News:

Robinhood Markets Inc. shares rose 4% in premarket trading after Chief Executive Officer Vlad Tenev told the Financial Times that the platform plans to give amateur investors access to private artificial-intelligence companies. Cryptocurrency-linked stocks are rallying amid risk-on sentiment as lawmakers move closer to a deal to reopen the US government. Health insurer stocks slipped. Novo Nordisk A/S shares rose after the Danish drugmaker withdrew from a takeover battle for obesity drug developer Metsera Inc., prompting relief among some investors that it won’t be spending $10 billion on an unproven asset. Diageo Plc named Dave Lewis, the former head of supermarket chain Tesco Plc, its new chief executive officer as the maker of Guinness stout and Johnnie Walker seeks to reboot after a period turmoil. Nvidia Corp. Chief Executive Officer Jensen Huang said he had asked Taiwan Semiconductor Manufacturing Co. for more chip supplies as artificial intelligence demand remained strong. TSMC also reported slowing growth in its revenue in October, potentially another indication that AI demand was moderating as the market turns frothy. Permira is nearing an agreement to acquire JTC Plc, the London-listed provider of fund solutions and corporate services, according to people familiar with the matter. Some of the main moves in markets:

Stocks

S&P 500 futures rose 0.9% as of 6:45 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 0.2% Currencies

The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1562 The British pound was little changed at $1.3168 The Japanese yen fell 0.5% to 154.20 per dollar Cryptocurrencies

Bitcoin rose 1.7% to $106,269.37 Ether rose 1.1% to $3,618.39 Bonds

The yield on 10-year Treasuries advanced three basis points to 4.12% Germany’s 10-year yield was little changed at 2.67% Britain’s 10-year yield was little changed at 4.47% Commodities

West Texas Intermediate crude rose 0.2% to $59.87 a barrel Spot gold rose 2% to $4,081.78 an ounce This story was produced with the assistance of Bloomberg Automation.

–With assistance from Subrat Patnaik, Julien Ponthus and Jan-Patrick Barnert.

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