Stocks Rally on Optimism that the US Government Will Soon Reopen

The S&P 500 Index ($SPX) (SPY) today is up +1.10%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.55%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +1.81%.  December E-mini S&P futures (ESZ25) are up +1.08%, and December E-mini Nasdaq futures (NQZ25) are up +1.75%.

US stock indexes are sharply higher today after a group of eight Senate Democrats on Sunday broke with their party to vote with Republicans to advance a bill to reopen the government.  The move boosted market sentiment and sparked a risk-on mood in asset markets.  The Senate must still schedule a final vote, and the measure must pass the House before reaching President Trump for his signature.  The bill would provide full-year funding for some departments, fund other agencies through January 30, and provide pay for furloughed government workers.  The bill will also resume withheld federal payments to states and localities and recall agency employees who were laid off during the shutdown.

Positive comments today from San Francisco Fed President Mary Daly were supportive for stocks and bonds when she said, “So far, the effects of the tariffs have largely been confined to goods, with little spillover into services inflation or inflation expectations, which remain relatively well-anchored around our 2% target.” She added that “we also see a labor market that’s softening and wage growth that is moderating, so you’re really not going to see a lot of pressure on the cost side of labor, meaning we don’t want to make the mistake of holding on too long to high interest rates only to find out we’ve injured the economy.”

The US government shutdown, now in its seventh week —the longest in history —is weighing on market sentiment and the US economy.  The government shutdown is delaying a host of government reports and is having an adverse effect on the US economy. 

The markets are discounting a 65% chance of another -25 bp rate cut at the next FOMC meeting on December 9-10.

The US Supreme Court last Wednesday appeared skeptical about whether President Trump’s reciprocal tariffs are legal.  Chief Justice Roberts and Justices Gorsuch and Coney questioned President Trump’s use of an emergency-powers law to collect tariffs, with Roberts saying the tariffs were an “imposition of taxes on Americans, and that has always been the core power of Congress.” The Supreme Court is expected to issue its ruling by late this year or early in 2026.  Lower courts have already ruled that Mr. Trump’s reciprocal tariffs are illegal, finding they are based on a specious claim of emergency authority under the 1977 International Emergency Economic Powers Act.  If the US Supreme Court upholds those rulings and strikes down the tariffs, then the US government may have to refund the reciprocal and fentanyl-linked tariffs already collected, totaling more than $80 billion, and Mr. Trump’s power to impose tariffs may be limited to well-founded sections of US trade law, such as sections 232, 301, and 201.

Q3 corporate earnings season is nearing its end as 455 of the S&P 500 companies have reported earnings results.  According to Bloomberg Intelligence, 82% of the S&P 500 companies that have reported so far have beaten forecasts, on course for the best quarter since 2021.  Q3 profits have risen +14.6% thus far, more than doubling expectations of +7.2% y/y. 

Overseas stock markets are higher today.  The Euro Stoxx 50 is up +1.86%.  China’s Shanghai Composite rose to a 1-week high and closed up +0.53%.  Japan’s Nikkei Stock 225 closed up +1.26%.

Interest Rates

December 10-year T-notes (ZNZ5) today are down -5 ticks.  The 10-year T-note yield is up +0.8 bp to 4.104%.  T-notes are under pressure today amid a stock rally, which has curbed safe-haven demand for government debt.  Also, hopes that the US government shutdown might be nearing an end have reduced safe-haven demand for T-notes.  In addition, supply pressures are weighing on T-notes as the Treasury will auction $125 billion of T-notes and T-bonds in the week’s November quarterly refunding, beginning with today’s $58 billion auction of 3-year T-notes. 

T-notes recovered from their worst levels today on dovish comments from San Francisco Fed President Mary Daly, who said the US economy is probably suffering a downturn in demand while tariff-related inflation appears to be contained for now, and warned against keeping interest rates too high for too long.

T-note prices have underlying support from the ongoing US government shutdown, which is now the longest in history and could lead to additional job losses, reduced consumer spending, and a weakened US economy, potentially allowing the Fed to continue cutting interest rates. 

European government bond yields fell from early highs today and turned lower.  The 10-year German bund yield dropped from a 1-month high of 2.697% and is down -0.6 bp to 2.660%. The 10-year UK gilt yield fell from a 2.5-week high of 4.509% and is down -0.8 bp to 4.457%.

The Eurozone Nov Sentix investor confidence index unexpectedly fell -2.0 to -7.4, weaker than expectations of an increase to -4.0.

Swaps are discounting a 4% chance for a -25 bp rate cut by the ECB at its next policy meeting on December 18.

US Stock Movers

Semiconductor stocks are rallying today, boosting the broader market.  Western Digital (WDC) and Micron Technology (MU) are up more than +6%, and Advanced Micro Devices (AMD) and Lam Research (LRCX) are up more than +4%.  Also, ARM Holdings Plc (ARM) and Marvell Technology (MRVL) are up more than +3%, and Applied Materials (AMAT), KLA Corp (KLAC), Intel (INTC), and GlobalFoundries (GFS) are up more than +2%.  In addition, ON Semiconductor (ON), Analog Devices (ADI), Broadcom (AVGO), and Qualcomm (QCOM) are up more than +1%. 

The Magnificent Seven technology stocks are climbing today, a supportive factor for the overall market.  Nvidia (NVDA) and Alphabet (GOOGL) are up more than +3%, and Amazon.com (AMZN) is up more than +2%.  Also, Apple (AAPL), Meta Platforms (META), Microsoft (MSFT), and Tesla (TSLA) are up more than +1%.

Gold-producing stocks are climbing today with the price of COMEX gold up more th +2% at a 2-week high.  Anglogold Ashanti Plc (AU), Barrick Mining (B), Gold Fields Ltd (GFI), and Newmont (NEM) are up more than +3%. 

TreeHouse Foods (THS) is up more than +22% after Investindustrial agreed to buy the company for about $2.9 billion, or about $22.50 a share. 

Venture Global (VG) is up more than +8% after reporting Q3 revenue of $3.33 billion, better than the consensus of $3.16 billion. 

Celestica (CLS) is up more than +7% after Citigroup upgraded the stock to buy from neutral with a price target of $375. 

Health insurance stocks are under pressure as US lawmakers move closer to ending the government shutdown without addressing the health care system.  As a result, Oscar Health (OSCR) is down more than -14% and Centene (CNC) is down more than -8% to lead losers in the S&P 500.  Also, HCA Healthcare (HCA) and Molina Healthcare (MOH) are down more than -4%, and Universal Health Services (UHS) is down more than -3%.  In addition, Humana (HUM) and Elevance Health (ELV) are down more than -2%, and Cigna Group (CI) and UnitedHealth Group (UNH) are down more than -1%. 

Monday.com (MNDY) is down more than -17% after forecasting Q4 revenue of $328 million to $330 million, weaker than the consensus of $333.7 million. 

Metsera (MTSR) is down by more than -15% after Novo Nordisk A/S declined to further raise its offer to buy the company, bringing a bidding war with Pfizer to an end. 

Applied Optoelectronics (AAOI) is down more than -11% after B Riley Securities downgraded the stock to sell from neutral with a price target of $15. 

Ball Corp (BALL) is down more than -4% after CEO Fisher said he was stepping down, effective immediately. 

Earnings Reports(11/10/2025)

AST SpaceMobile Inc (ASTS), Howard Hughes Holdings Inc (HHH), Interpublic Group of Cos Inc/The (IPG), Maplebear Inc (CART), Occidental Petroleum Corp (OXY), Paramount Skydance Corp (PSKY), Rocket Lab Corp (RKLB), Roivant Sciences Ltd (ROIV), StandardAero Inc (SARO), Starwood Property Trust Inc (STWD), Tyson Foods Inc (TSN).