Dow Soars Past 48,000 Milestone on Hopes of Government Reopening

The Dow Jones Industrial Average notched a historic achievement on Wednesday, recording its first-ever close above the 48,000 level, extending gains from the previous session. The 30-stock index rose 326.86 points, or 0.68%, to settle at 48,254.82, while also hitting a fresh all-time intraday high. This milestone rally was largely driven by optimism on Wall Street surrounding the expected end to the record-breaking US government shutdown, which has now entered its 43rd day. In contrast to the Dow’s surge, the S&P 500 traded near the flatline, finishing up a modest 0.06% at 6,850.92, while the Nasdaq Composite slipped 0.26% to 23,406.46.

Investor attention remained fixed on Washington, D.C., as the federal government appeared poised to reopen as soon as the end of the week. The Senate passed a spending bill earlier, which subsequently moved to the House of Representatives for a final vote, expected to occur around 7 p.m. ET. One portfolio manager noted that getting the longest closure in history resolved would be welcomed, especially to resume the release of delayed economic data that could shed light on signs of weakness in the labor market. He suggested that once the terms for reopening are decided, the focus may shift to the implications of extending funding into January.

The Dow’s strong outperformance was fueled by a significant run-up in key financial stocks, reflecting investors’ hopes for economic stability following the reopening. Heavyweights in the sector, including Goldman Sachs, JPMorgan, and American Express, all helped lift the blue-chip index and scored fresh record highs during the trading session. Other economy-sensitive stocks like Caterpillar also gained. Across the broader market, bank shares enjoyed a boost, with Morgan Stanley, Wells Fargo, and Bank of America also hitting new highs, driving the Financial Select SPDR Fund (XLF) up nearly 1%.

Beyond the financial sector, the artificial intelligence (AI) trade continued the volatility seen this month. While shares of Advanced Micro Devices popped 9%, other AI-related stocks like Oracle and Palantir Technologies moved lower. Uneasy sentiment persists among some investors that tech valuations may be stretched following their recent surge. Despite the high valuations, analysts suggest that “real demand and use case for AI” remains, noting that strong earnings from technology companies alleviate immediate bubble concerns. They advised trimming gains and re-diversifying across other equity market segments.

This session marked a continuation of the split market dynamic seen previously, where the Dow rallied while the Nasdaq slipped. On Wednesday, the defensive health care sector was a top performer, driven by advances in names such as Eli Lilly and Johnson & Johnson, signaling a rotation by investors into parts of the market with perceived lower valuations.