Markets Climb Amid Optimism Over Shutdown Deal

On Saturday’s Market Minute newsletter, “Markets Fracturing, But Not Breaking Yet,” I highlighted the technical setup heading into the weekend that suggested a potential bullish setup if positive news around the government shutdown hit the tape this weekend. The S&P 500 successfully defended its 50-day Simple Moving Average (SMA), and a bullish hammer candle formed on Friday, typically a signal of buyers stepping in and short-sellers covering ahead of the weekend. Now we need to see some follow through over the next several sessions.

The catalyst behind this morning’s bullish tone centers on the Senate passing the first procedural vote to fund the government through January 30, with the measure advancing by a 60–40 vote. If the bill passes the House of Representatives, it would restore SNAP food aid through September 2026, provide full funding for Agriculture and Veterans Affairs, and could pave the way for a December vote on extending ACA premium tax credits which is still a major sticking point that could impact the healthcare space.

Some economists estimate that the 40-day government shutdown has already shaved roughly 1.5% off fourth-quarter GDP growth. However, reopening the government should help alleviate near-term economic strain and improve U.S. travel operations, as the FAA has been forced to take extraordinary measures to maintain flight schedules while managing safety risks.

The risk-on sentiment this morning is reflected in rising Treasury yields—signaling traders are selling bonds—as well as higher equity markets. From a technical standpoint, bulls are eyeing the 20-day SMA for the S&P 500, currently near the 6,760 level, as a key resistance point to reclaim. For E-mini S&P 500 futures, the Anchored Volume-Weighted Average Price (VWAP) sits around 6,819.32, which could serve as another area of potential selling pressure.

Assuming the government shutdown officially ends this week, the next major focus will shift to the incoming wave of delayed economic data expected over the coming weeks, likely to show considerable volatility and mixed signals regarding the overall health of the U.S. economy. From a technical standpoint the market is still holding on to its primary bullish trend but volatility is still elevated at the moment.

Charles Schwab Media Productions Company and all third parties mentioned are separate and unaffiliated, and are not responsible for one another's policies, services or opinions.

Data contained herein is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed. All events and times listed are subject to change without notice.