The longest government shutdown in U.S. history is about to end, and history shows that after a restart, U.S. stocks often continue to rise

Since the U.S. government shutdown on October 1, the S&P 500 index has risen by 0.6% over the past 40 days, with a more significant increase in U.S. stocks on Monday as the shutdown appeared to be coming to an end within days. According to historical statistics, the benchmark U.S. stock index is expected to continue rising in the upcoming holiday season.

According to data compiled by CFRA Chief Market Strategist Sam Stovall, in the previous 15 instances following the end of a U.S. government shutdown, the S&P 500 index averaged a 2.3% increase in the following month. If a similar increase occurs this time, the S&P 500 index could approach 7,000 points by mid-December. Stovall noted that market corrections seem to be delayed after the end of a shutdown. History shows that the market typically rises one month after a shutdown ends.

In fact, during the five weeks of the government shutdown, the market was not entirely calm. In the week of October 10, the S&P 500 fell by 2.4% due to concerns over trade tensions. Last week, the S&P 500 dropped by 1.6% as AI-themed trading appeared somewhat frothy. However, during this period, the stock market rose more than 4% over three weeks due to better-than-expected corporate earnings.

According to CFRA data, since the start of this government shutdown, the S&P 500 has risen by 2.2%, outperforming the average performance during previous shutdowns since 1981.

After Senate Democrats agreed to hold a full vote on the related agreement, this round of the U.S. government shutdown stalemate could end as early as Wednesday, pending approval from the House of Representatives. Investors believe this move means the risk of widespread damage to the U.S. economy and corporate earnings has been avoided, leading to a positive reaction.

Market focus can now shift back to monetary policy paths, with expectations that the Federal Reserve will implement a third consecutive rate cut next month, and attention on the impact of tariffs on inflation. Keith Lerner, Chief Investment Officer and Chief Market Strategist at Truist Advisory Services Inc., stated:

This is considered a moderate positive, and people can continue to look ahead, but soon market attention will return to the most important parts of technology and the market. Investors will now focus on NVIDIA's earnings report on November 19.

With federal employees returning to work and the normal release of economic data resuming, some of the uncertainties previously faced by the market have been alleviated. Strategists believe the U.S. stock market still has upward momentum, even though the stock market has already seen a slight increase during this period.

Some analysts point out that some of the previously strongest-performing stocks, such as the seven major tech giants that account for about a quarter of the S&P 500's weight, have recently pulled back, which may attract bargain hunters. The recent pullback in AI concept stocks may present attractive trading opportunities.

Some analysts also believe that other companies collaborating with the government (such as CACI International and Palantir Technologies) are also expected to benefit from the end of the shutdown.

Additionally, expectations for more fiscal stimulus are causing investors to reconsider the so-called "currency devaluation trades," which is reversing the slight pullback in stock market valuations seen recently However, the end of the government shutdown is not entirely positive for the U.S. stock market. During the shutdown, the lack of official inflation and employment data has temporarily led investors to overlook the risks the Federal Reserve faces in terms of employment and price stability. This is a two-way risk. If some economic data, especially employment data, significantly diverges from the information previously relied upon by the market, it could be either a positive or a negative.

The Senate compromise agreement did not extend subsidies for the Affordable Care Act (ACA), which is one of the core issues of contention between the Democrats and Republicans. This led to a significant drop in the stock prices of insurance companies participating in government healthcare programs, such as Centene and Molina Healthcare, on Monday. Both sides are expected to continue discussions on extending funding that is set to expire at the end of this year, but there are no guarantees yet.

In addition, the U.S. stock market faces multiple other pressures, including high valuations, concerns about the health of American consumers, and sector-specific pressures in certain areas such as healthcare. However, many Wall Street strategists still believe that as the uncertainty around government spending eases, market sentiment will marginally improve, leaving room for overall market growth