Markets closed the third quarter on a cautiously optimistic note Tuesday as U.S. stock indexes climbed despite the risk of a government shutdown at midnight. The Dow Jones Industrial Average rose 168 points, or 0.4%, to finish near 38,450, the S&P 500 gained 0.7% to about 5,350, and the Nasdaq Composite advanced 1.1% to roughly 16,100. The S&P’s advance capped a fifth straight monthly gain for the index, reflecting a resilient stretch for equities even as political tensions ratcheted higher.

Investor attention centered on Washington, where lawmakers were racing to pass stopgap funding to avert a shutdown that officials warn could curtail federal services and dampen growth. Economists estimate a prolonged shutdown could shave between 0.1 and 0.3 percentage points off fourth-quarter GDP, while the Treasury has cautioned of disruption to federal payments and market liquidity if funding lapses. Nevertheless, markets priced in a tempered view of the risk, with short-term volatility measures easing during the trading session.

Corporate news provided the more immediate market lift. Nike led gains among consumer names after the athletic apparel giant reported surprising top-line strength for the quarter. Shares jumped more than 9% in afternoon trading, adding an estimated $22 billion to market capitalization. The company said comparable sales rose 6% year-over-year, driven by stronger demand in North America and e-commerce, and reported revenue that beat the consensus forecast. “Nike’s results signal consumers are still willing to spend on discretionary brands, which calms nerves about consumer retrenchment,” said a portfolio manager at a global asset manager.

Technology stocks, which had been volatile earlier in the month amid profit-taking, steadied after reports that Nvidia and other chip names continued to benefit from AI-related demand. Nvidia’s recent rally — fueled in part by partnerships in the AI ecosystem — has been a major driver of narrow-cap leadership in markets this quarter. Yet traders noted breadth remained limited: a smaller cohort of mega-cap tech firms continued to account for much of the market’s gains, leaving many cyclical and small-cap stocks lagging.

Safe-haven assets signaled persistent uncertainty. Gold hit a fresh intraday record of about $2,400 an ounce earlier in the week as investors hedged geopolitical and political risks, while short-term Treasury yields held near recent highs amid ongoing debates over fiscal policy and the Federal Reserve’s rate path.

Policy implications were central to analysts’ outlooks. “Markets are looking for Washington to punt, not to precipitate a full shutdown,” said an economist at a major research firm. “But the underlying risk means any extended lapse in funding could force a re-pricing in coming weeks, particularly if it coincides with weaker economic data.”

As October opens, strategists expect choppy trade if Congress fails to secure funding quickly, but many emphasize the balance between headline risk and underlying corporate earnings. For now, investors appear willing to focus on earnings beats like Nike’s, treating political brinkmanship as a background risk rather than an immediate trigger for a broader sell-off.