Dow Jones gains 1,000 points in three sessions, ends at record high on shutdown optimism

US benchmark indices had a mixed session on Tuesday as investors rotated out of some tech names into broader economy stocks, and on rising optimism of the longest US government shutdown in history coming to an end soon.

The Dow Jones gained nearly 600 points on Tuesday, to end at a record high. This has taken the index's three-day gains to over 1,000 points. The S&P 500 recovered 40 points from the lows of the day to end higher, while the Nasdaq, despite an intraday recovery, ended below the flat line, led by a drop in Nvidia.

Nvidia shares fell over 3% after Softbank disclosed that it has sold its entire stake in the world's most valued company for just under $6 billion to fund its investment in OpenAI.

The bill to reopen the government was passed by the US Senate and will now be placed before the House of Representatives mostly on Wednesday. On passage in the house, the bill will be signed by US President Donald Trump, who has already endorsed it in its current form.

In an historical analysis of the past 15 shutdowns ending, the S&P 500 gains 2.3% on average in the next one month. If such a scenario plays out, the index could touch levels of 7,000 by mid-December, according to CFRA research.

The Dow Jones surged, while other indices recovered on Tuesday, despite Michael "big short" Burry alleging that AI hyperscalers have artificially inflated their earnings numbers by understating their depreciation expenses on projections that their chips will last longer. Burry recently disclosed short positions in Nvidia and Palantir, two of the biggest S&P 500 movers this year.

The optimism on Wall Street stems from the fact that the mention of words like "economic slowdown" or synonymous, have declined to the lowest in earnings calls since 2007. JPMorgan Market Intelligence stated that it remains buyers of any dip while UBS stated that easing from the Fed, strong earnings and continued AI spending will enable the Wall Street rally further as the year draws to a close.

(With Inputs From Agencies)