The stock market rallied late on Tuesday to wrap up its best September in more than a decade.
The Dow Jones Industrial Average rose 82 points, or 0.2%, to mark a record closing high. The S&P 500 was up 0.4%. The Nasdaq Composite was up 0.3%. The S&P and Nasdaq each had their best September performance since 2010.
The yield on the 2-year Treasury note dropped to 3.6%, but the 10-year yield was up to 4.15%.
The market bucked historical trends by rallying to fresh highs earlier in month, riding another wave of artificial intelligence exuberance. The Federal Reserve also resumed cutting interest rates earlier this month, and traders see a 77.7% chance that rates will end the year another half-point lower, according to the CME FedWatch Tool.
Though a midnight ET deadline to avert a government shutdown is expected by many on Wall Street to pass without an agreement, the S&P 500 has averaged a gain of 0.05% during previous government shutdowns, according to Dow Jones Market Data. The index has gained during the past five shutdowns. The average S&P 500 performance during shutdowns that lasted 15 days or longer was nearly 2.9%.
“While a government shutdown lasting longer than a few days would surely be problematic for many federal employees whose paychecks would be delayed, for most other Americans, the only impact of a government shutdown is the endless coverage of it in the news,” writes Bespoke Investment Group co-founder Paul Hickey. “So, maybe rather than ignoring the ‘risks’ of a shutdown, investors realize that the idea of a shutdown is mostly all bark and little bite.”
The S&P also marked its fifth monthly gain in a row. Jay Kaeppel, senior research analyst at SentimenTrader, notes that historically, five-straight months of gains have been followed by higher prices in the year ahead.”Momentum is a real thing in the stock market,” Kaeppel writes. “Many investors start to get skittish following a significant advance, assuming that a pullback must be in the offing. And pullbacks–sometimes sizable–are a normal part of market action. However, the real question for longer-term investors is more one of ‘fight or flight’ or, maybe more accurately, ‘flight or sit tight.'”