Stocks rallied on Monday, boosted by a surge in Apple shares, as investors anticipated a possible end to the ongoing US government shutdown and a series of major corporate earnings reports and inflation data expected in the coming days.

The Dow Jones Industrial Average closed up 515.97 points, or 1.12%, to 46,706.58. The S&P 500 also rose 1.07% to close at 6,735.13, while the Nasdaq Composite gained 1.37% to close at 22,990.54

Apple led the market rally, rising nearly 4% to a record close, after receiving a buy from hold recommendation upgrade at Loop Capital. The company highlighted rising iPhone demand, saying that "we are NOW in the early stages of AAPL's long-awaited adoption cycle, which suggests continued iPhone shipment expansion through 2027."

The government shutdown, which is entering its 20th day, is also providing a boost to stocks, "likely ending this week," National Economic Council Director Kevin Hassett told CNBC's "Squawk Box" on Monday. He added that he believes "moderate" Democrats will unite this week to reach a deal, and the White House is prepared to take stronger steps to end the shutdown if no agreement is reached this week.

Stocks ended a volatile trading week, ultimately closing higher despite escalating tensions between the U.S. and China, a selloff triggered by regional bank loan losses, and declines in several high-flying artificial intelligence companies. However, a strong start to the third-quarter earnings season appears to be lifting sentiment, along with investor anticipation of another quarter-percentage-point interest rate cut at the Federal Reserve's late October meeting.

After the first week of earnings season, 76% of the 58 S&P 500 companies that have released earnings so far have topped earnings expectations, far exceeding the first-week average of 68% and slightly higher than the 73% figure for the previous quarter, according to Bank of America.

This week, several major companies are expected to report quarterly results. Netflix, Coca-Cola, Tesla, and Intel are among the names due to announce. Investors are hoping for continued strong earnings, which may offset any challenges in the macroeconomic landscape.

Investors also continue to shrug off credit risk concerns that had led to a broader downturn on Thursday. Markets panicked after Zions Bancorporation and Western Alliance disclosed issues related to bad debts, sending shares of several major financial firms and regional banks lower before recovering on Friday. Shares of Zions, which is scheduled to report earnings after the closing bell, and Western Alliance both rose on Monday, each rising 4%.

"The market is recovering from the ongoing tariff drama with China and the government shutdown impasse, and is now more focused on monetary policy and earnings, both of which are much more positive and impactful," said Jamie Cox, Managing Partner at Harris Financial Group. "The market is widening, and investors would be wise to take advantage of it while it lasts."

The three major US indexes rose slightly on Friday after President Donald Trump appeared optimistic about a potential trade deal with China ahead of his meeting with Chinese President Xi Jinping later this month in South Korea. Trump echoed similar sentiments on Monday, saying he hoped for a "fair" deal with the country.

Treasury Secretary Scott Bessent also said on Friday that he believes "things have eased" with China and that he will likely meet with Chinese Vice Premier He Lifeng next week. These comments signaled to traders that Trump's threat to impose additional 100% tariffs on Chinese imports starting November 1 is unlikely to come to fruition. (alg)

Source: CNBC