Nasdaq, Dow Futures Flash Green After Trump Signs Bill To End Longest Shutdown Ever — Strategist Sees Relief, But Warns Volatility Isn’t Going Away Yet

• A technical strategist said removing the uncertainty from a government shutdown tends to support equities historically.
• Across the last 20 shutdowns since 1976, the S&P 500 has averaged gains of 1.2% and 2.9% in the one- and three-month periods following the shutdown.
• Cisco’s commentary regarding AI in its earnings report could boost the AI space.

U.S. stock futures rose modestly late Wednesday as President Donald Trump signed the bill to reopen the government that has remained shut for a record 42 days. The bill, which provides for stopgap financing, was earlier passed by the House by a 222-209 margin, with six Democrats voting in favor.

The market-moving artificial intelligence (AI) plays could gain ground after networking giant Cisco Systems, Inc. (CSCO) cited AI as boosting its quarterly performance.

Morgan Stanley’s Chief U.S. Equity Strategist Mike Wilson said in a recent podcast that he expects relief for the stock market after the softness seen recently. His optimism is based on the expectation that weak earnings seasonality will end and the government shutdown will be resolved. That said, he warned about imminent volatility. “We expect volatility to persist until the Fed fully commits to the ‘run-it-hot’ strategy of the administration.”

LPL Chief Technical Strategist Adam Turnquist suggested the current shutdown, though the longest in history, was benign. Since the shutdown began on Oct. 1, the S&P 500 has gained 2%, with a peak-to-trough decline of only 3%, both figures better than average for prior shutdown periods, the strategist said.

Turnquist said removing the uncertainty from a government shutdown tends to support equities historically.  “Across the last 20 shutdowns since 1976, the S&P 500 has averaged gains of 1.2% and 2.9% in the one- and three-month periods following a budget resolution, compared to 0.8% and 2.4% during all periods over the same timeframe,” he added.

How Futures Are Trading

As of 11:50 p.m. ET on Wednesday, the Nasdaq 100,  S&P 500 and the Dow futures rose about 0.24%, 0.15% and 0.20%, respectively, while the Russell 2,000 Index edged marginally.

On Stocktwits, retail sentiment toward the SPDR S&P 500 ETF (SPY), an exchange-traded fund that tracks the S&P 500 Index, improved to ‘extremely bullish’ as of late Wednesday from the ‘bullish’ mood seen the day before. The Invesco QQQ Trust (QQQ) ETF, which tracks the Nasdaq 100 Index, continued to attract ‘extremely bullish’ sentiment. The message volume on the SPY ETF stream remained at ‘normal’ levels and that on the QQQ stream remained ‘high.’

Commenting on the SPY stream, a bullish watcher said they expect the SPY to open at $690. The ETF settled Wednesday’s session at $683.38.

Another user saw the end of the government shutdown as “good news for all Americans.” They predicted that economic rejuvenation would occur.

How Markets Fared Wednesday

The Dow Jones Industrial Average surged to a new high, surpassing the 48,000 mark for the first time, as traders reacted to promising signs that the government shutdown was nearing an end. Traders also focused on speeches by Federal Reserve officials, which revealed a mixed stance toward December rate cuts. Techs, especially communication services stocks, once again lagged, with the Nasdaq Composite closing lower for the session.

 The QQQ ETF edged down 0.08%, the iShares Russell 2000 ETF (IWM) dipped 0.25%, while the SPY ETF closed barely in the green (+0.06%). On the other hand, the SPDR Dow Jones Industrial Average ETF Trust (DIA) climbed 0.21%.

Key Catalysts To Watch Out For

A slew of Federal Reserve speakers are lined up for the day, including:

-San Francisco Fed’s Mary Daly ( 8 a.m. ET)

- New York Fed’s John Williams (9:20 a.m. ET)

-Minneapolis Fed’s Neel Kashkari (10:25 a.m. ET)

-St. Louis Fed’s Alberto Musalem (12:15 p.m. ET)

- Cleveland Fed’s Beth Hammack (12:20 p.m. ET)

-Atlanta Fed’s Raphael Bostic (3:20 p.m. ET)

The Treasury is due to release its monthly federal budget at 2 p.m. ET.

The most noteworthy earnings scheduled for the day are Disney (DIS), Bilibili (BILI), Canadian Solar (CSIQ), JD.com (JD), Stratasys (SSYS), Applied Materials (AMAT), Beazer Homes (BZH), NANO Nuclear Energy (NNE), Newsmax (NMAX) and Starz Entertainment Corp. (STRZ).

How Other Markets Fared

Crude oil futures fell further in the Asian session after their 4%+ slump on Wednesday, dragged by OPEC’s commentary regarding demand-supply equilibrium in 2026. Gold futures rose again and remain firmly above $4,200. The 10-year U.S. Treasury note yield edged up after receding sharply on Wednesday. The U.S. dollar is trading flat against its counterparts. 

Most major Asian markets traded nervously despite the passage of the U.S. budget bill.

For updates and corrections, email newsroom[at]stocktwits[dot]com.

Read Next: ‘Big Short’ Investor Michael Burry Mocks Media Over His Palantir Short Bet, Says Their Math Was Off By Roughly 100x

Share

·

Add us on