Wall Street climbed sharply on Monday, with Nvidia up 5.8% and Palantir 8.8%, as artificial intelligence (AI) stocks rebound and progress in Congress raises hopes of ending the U.S. government shutdown.
The Senate cleared an initial hurdle late Sunday on a compromise to restore federal funding, though final approval from Congress remains uncertain.
“The government shutdown lasted longer than expected. There were concerns about the economy, potential flight disruptions, and broader impacts,” said Chris Zaccarelli, chief investment officer at Northlight Asset Management. Tech Stocks Lead the Rebound
Heavyweight tech companies recovered from recent losses. The S&P 500 technology sector index had fallen 4.2% last week. Nvidia, the world’s most valuable company, rose 5.8%, while AI analytics firm Palantir jumped 8.8%. Tesla added 3.7%.
Ross Mayfield, investment strategy analyst at Baird, said, “This is a rebound after being slightly oversold last week. The 'buy the dip' approach is acting quickly in the tech and AI space. Earnings in this sector have been strong.”
Overall, the S&P 500 climbed 1.54% to 6,832.43 points, the Nasdaq gained 2.27% to 23,527.17 points — its largest one-day percentage gain since May 27 — and the Dow Jones Industrial Average rose 0.81% to 47,368.63 points.
The small-cap Russell 2000 added 0.9%, while the PHLX semiconductor index jumped 3%. Trading volume was relatively light at 17.9 billion shares, compared with a 20-session average of 20.8 billion. Airlines Face Pressure
Airlines were under pressure as flight cuts and air traffic controller shortages continued to disrupt travel. United Airlines fell 1.3%, and American Airlines declined 2.5%. Betting website Polymarket indicated an 88% probability that the shutdown would end this week.
The historic shutdown has left gaps in federal economic data, forcing markets and the Federal Reserve to rely on private indicators, providing a mixed picture. Some Fed officials reiterated caution ahead of upcoming monetary policy decisions, while Fed Governor Stephen Miran called for a significant rate cut. AI Optimism and Earnings Season
The AI sector has fuelled a broader bull run in U.S. stocks this year, though monetisation concerns and internal spending previously triggered a market sell-off. Last week, the Nasdaq recorded its worst performance in more than seven months.
Third-quarter earnings season is nearly complete, with 83% of the 446 S&P 500 companies reporting results exceeding expectations, according to LSEG data.
Health insurer stocks fell after the Senate’s shutdown deal excluded extensions for Affordable Care Act subsidies, pushing the issue to a December vote. Centene dropped 8.8%, Humana fell 5.4%, and Elevance Health declined 4.4%.
Metsera plunged 14.8% after Pfizer won a $10 billion bidding war to acquire the company, while Eli Lilly rose 4.6% to a record high following a Leerink Partners upgrade.
Advancing stocks outnumbered decliners in the S&P 500 by a 1.7-to-1 ratio. The S&P 500 recorded 32 new highs and 8 new lows, while the Nasdaq saw 106 new highs and 128 new lows.
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Overnight U.S. strikes caused blackouts in southwestern Iran and hit the northwestern city of Tabriz for the first time. Separately, a U.S. soldier died in northern Iraq during a controlled detonation of an unexploded Iranian drone.
The Philippines and China traded accusations on Monday after their vessels clashed at the disputed Second Thomas Shoal in the South China Sea. Manila said a Philippine sailor was injured, while Beijing claimed Philippine forces started the confrontation.
Armenian authorities have launched a criminal investigation into allegations that supporters of the Strong Armenia party offered bribes to voters in exchange for their support.
Yemen's Iran-aligned Houthi movement has announced a naval blockade on Saudi Arabia, raising fears of further regional escalation and possible disruption to global energy supplies and key shipping routes.
Lionel Messi's Argentina face Spain in World Cup final with history on the line. Spain and Argentina meet on Sunday in the 2026 World Cup final, bringing together the reigning champions of Europe and South America.
At least six people were killed and 21 others injured after two earthquakes struck Peru's central Junín region, destroying dozens of homes and triggering a major emergency response.
The United States launched fresh strikes against Iran after two U.S. service members were killed in Jordan. U.S. President Donald Trump paid tribute to the fallen troops as Iran warned of further escalation.
Lebanese President Joseph Aoun will make his first trip to the White House this week to present a plan to U.S. President Donald Trump on how to disarm Iran-backed militant group Hezbollah and secure Israel's withdrawal from Lebanon.
Ontario Premier Doug Ford has criticised U.S. President Donald Trump's comments blaming Canada for wildfire smoke affecting parts of the United States. He called Trump's remarks "absolutely unacceptable" as crews battle hundreds of forest fires across the province.
China's Foreign Ministry has said it is closely monitoring the United Kingdom's nationalisation of British Steel. Prior to the British government fully taking over the loss-making company on Thursday, it was previously owned by Chinese private steelmaker Jingye.
Apple is closing in on Nvidia's position as the world's most valuable publicly traded company, as investors increasingly bet the iPhone maker can turn artificial intelligence into sustained earnings growth.
AI-powered shopping assistant Phia has been accused of using "cookie stuffing" to claim affiliate commissions for purchases it did not generate, according to a Bloomberg investigation. The company says the issue has now been resolved.
The UK government has nationalised British Steel, taking full ownership of the country's only primary steelmaker from its Chinese owners to safeguard the future of the UK's steel industry.
Saudi Arabia is moving crude through the Red Sea port of Yanbu at close to maximum capacity this week, as tensions with Yemen's Houthis add to broader concerns over Gulf shipping routes, according to data and industry sources cited by Reuters.
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