US STOCKS-S&P 500, Nasdaq climb as investors brush off shutdown woes, hawkish talk

By Niket Nishant and Sukriti Gupta

Sept 29 (Reuters) - The S&P 500 and the Nasdaq indexes rose on Monday, rebounding from last week's declines, as investors shrugged off fears of a looming government shutdown and hawkish remarks from a Federal Reserve official.

The surge underscores a strong risk-on sentiment among investors, whose expectations of a dovish Fed have helped equities sustain lofty valuations, even amid persistent inflation concerns and labor market uncertainties.

"Dip buyers keep being rewarded in this market. One day they won't, but until proven otherwise you need to be buying dips," said Matthew Tuttle, CEO of Tuttle Capital Management.

At 11:52 a.m. ET, the Dow Jones Industrial Average .DJI fell 92.77 points, or 0.2%, to 46,154.52. The S&P 500 .SPX gained 11.59 points, or 0.17%, to 6,655.29, while the Nasdaq Composite .IXIC rose 104.87 points, or 0.47%, to 22,588.94.

Attention is now riveted on a standoff between Republicans and Democrats over funding that has raised the prospect of a shutdown beginning Wednesday, the first day of the U.S. government's 2026 fiscal year.

"Financial markets have generally shrugged off government shutdowns. However, prior shutdowns are not fully analogous to the potential shutdown this week," Goldman Sachs economists said in a note.

A potential shutdown would stall the release of key economic data, including Friday's nonfarm payrolls report, and cloud the outlook for markets.

Investors are also monitoring commentary from several Fed policymakers for any signs of concern over the potential loss of economic visibility should a shutdown materialize.

Cleveland Fed President Beth Hammack, among the most hawkish Fed officials and not a voter on policy this year, said on Monday the central bank needed to maintain restrictive monetary policy to cool inflation. Traders, however, are pricing in a 91.4% chance of a 25-basis-point rate cut at the next Fed meeting.

The S&P 500 technology .SPLRCT sector gained about 0.5%. Nvidia NVDA.O rose 2.1%, while Micron Technology MU.O added 4.1%. Lam Research LRCX.O advanced 2.4%, after Deutsche Bank upgraded the rating on the chip-making equipment firm to "buy" from "hold".

The stocks catapulted the broader semiconductor .SOX index to a record high, as well as boosted the Nasdaq.

AppLovin APP.O set a new record and was last up 5.8%. Morgan Stanley raised the target price on the stock to $750 from $480.

Losses in stocks such as Chevron CVX.N, down 2.4%, and McDonald's MCD.N, down 1%, weighed on the Dow.

The S&P 500 has gone 103 trading days without falling below its 50-day average, an unusually long streak that shows how strong the market has been, BTIG said, noting that the index may be due for a pullback.

U.S.-listed shares of cannabis-related companies rose, with Canopy Growth CGC.O and Cronos Group CRON.O climbing 15% and 13%, respectively, while Tilray Brands TLRY.O added 39.2%. Trump on Sunday shared a video promoting the health benefits of hemp-derived cannabidiol.

Electronic Arts EA.O climbed 4.7% after agreeing to be taken private in a $55 billion deal.

Advancing issues outnumbered decliners by a 1.18-to-1 ratio on the NYSE and by a 1.1-to-1 ratio on the Nasdaq.

The S&P 500 posted 30 new 52-week highs and four new lows, while the Nasdaq Composite recorded 93 new highs and 55 new lows.