Stocks surge on hopes for an end to the government shutdown. Why the reopening could get tricky.

By Joy Wiltermuth

A reopened government will unleash a trove of delayed U.S. economic data, which could also spark volatility

U.S. stocks rallied sharply on Monday on hopes of an end to the longest government shutdown ever.

It's been a bullish start to the week on Wall Street, with stocks roaring higher Monday on optimism about a potential deal to end the longest government shutdown in history.

The outline of a compromise came as missed federal paychecks, canceled flights and other ramifications of the shutdown were starting to bite. A resolution, while not guaranteed, is expected later this week.

Yet the tone on Wall Street already was one of relief, with tech shares staging a big rebound following their worst week since the April tariff tumult. The S&P 500's information technology XX:SP500.45 and communications services XX:SP500.50 sectors scored daily gains on Monday of 2.7% and 2.5%, respectively, according to FactSet.

That compares with a 1.5% gain for the S&P 500 index SPX and a 2.3% jump for the Nasdaq Composite Index COMP, its biggest daily percentage gain increase since mid-May, according to Dow Jones Market Data. The Dow Jones Industrial Average DJIA rose 0.8%.

"We just didn't know how long it would last - or if there would be a meaningful economic impact," said Sameer Samana, head of global equities and real assets at the Wells Fargo Investment Institute. "At this point, there has been an [economic] impact, but that doesn't derail a pretty positive backdrop for markets."

A reopened government should mean less "fog" in economic data and potentially pave the way for the Federal Reserve to cut rates for a third time this year in December, he said.

Furthermore, while the labor market has been cooling, recent signs point to companies that feel the time has come to "right-size" headcount after hoarding labor in the wake of the pandemic, Samana said. "For companies and profits, that's a positive," he said, so long as there isn't a "wholesale shedding of workers."

Read: Is the U.S. jobs market tanking? Here's what the latest clues say.

'Careful what you wish for'

Investors already have gone two months in a row without nonfarm payroll reports from the Bureau of Labor Statistics, putting private sources of data in the spotlight instead.

Outside of a few bumpy days, the all-important $30 trillion Treasury market has been on a pretty even keel, with the 10-year Treasury yield at 4.12%, roughly unchanged on the month so far, according to Dow Jones Market Data.

"In bonds, not much has changed," said Jack McIntyre, a portfolio manager for fixed income at Brandywine Global. "The data is still going to be messy," he said. "I'm not sure when we are going to get it - or of the quality of it."

That has investors gearing up for the release of a trove of delayed economic data, but without a detailed playbook in terms of how it might emerge or be digested by the market.

See: Here's when to expect key jobs and inflation reports after the government reopens

"You have to be careful about what you wish for," said Robert Pavlik, senior portfolio manager at Dakota Wealth Management. "The thing that worries me the most is: Are we going to see some signs that recent announcements of layoffs are more widespread?"

Investors have been clinging to hope that the "no hire, no fire" jobs market from August holds. While job creation has slowed considerably, the unemployment rate was last pegged at 4.3%, the highest since 2021.

AI plays are still expensive

While concerns about lofty tech valuations didn't melt away with Monday's optimism over the government's looming reopening, the tech selloff made popular AI plays a bit less expensive.

A bit of "steam being let off AI-related names opens up the trade to more individuals coming in," said Pavlik at Dakota Wealth. That backdrop has him optimistic about the typically favorable year-end period.

Quarterly earnings have been mostly good, while tax cuts and other potential stimulus from the Republican tax and spending bill should be positives in early 2026.

"The one thing that seems to be happening is that the market finally seems to be accepting that megacap tech stocks are terrific companies, but they are very, very expensive," said Scott Welch, chief investment officer at Certuity, a wealth-management firm. That puts AI plays more in a "show me" phase, in terms of when they might monetize huge AI spending, he said.

"I'm recommending to clients: Let's stay diversified and not try to capture every last penny," Welch said. But the problem is that about 10 tech stocks account for almost 40% of the market cap of the S&P 500. Should one end up getting punished because of earnings or something else, it can weigh down an entire stock portfolio, he said.

"If your portfolio is reasonably constructed, you'll do just fine."

Samana at Wells Fargo said he's bullish on the year-end period for stocks, unless there's some "tantrum" in the bond market that pushes up longer-duration yields again.

"But don't lose the plot," he said. "This is all into an uptrend."

-Joy Wiltermuth

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11-10-25 1817ET