Stock markets charged higher on Monday as investors cheered prospects that the US government shutdown could be nearing an end, after lawmakers reached a deal likely to break the record 40-day impasse.

The prospect of operations resuming in the world's biggest economy helped temper lingering worries about extended tech valuations amid talk of an AI bubble.

"Everyone's now anticipating we'll see the government reopen in the next couple of days," said Jack Ablin from Cresset Capital.

That's "good for the consumer, good for investors, really good for anyone who travels," Ablin said.

A group of Democrats in the Senate sided with Republicans in a procedural vote on the deal on Sunday evening, clearing the way for a formal debate after reaching a bipartisan agreement to fund government operations through January.

A government reopening could also provide clarity on US inflation and on the soft labour market, which will determine whether the Federal Reserve cuts interest rates again, as is widely expected next month.

"If all goes well, some federal agencies could reopen as soon as Friday," said David Morrison, senior analyst at Trade Nation.

He noted that both investors and the Fed had been "flying blind since the beginning of October, with a near-complete absence of data."

"Fed Chair Jerome Powell has played down the prospect of another rate cut in December, as it is far from obvious that inflation has peaked," Morrison added.

But as the shutdown entered its 41st day on Monday, investors focused on the US government reopening. They had grown increasingly concerned about the impact of severe disruptions of food benefits to low-income households, and of air travel heading into the Thanksgiving holiday.

"Shutdowns haven't typically had a big bearing on the economy or on financial markets. But, this one...looked as though it might start to cause some trouble," said analysts at Capital Economics.

Heavyweight tech stocks rebounded from some recent losses. Nvidia, the world's most valuable company, rose 5.8 percent. AI data analytics firm Palantir jumped 8.8 percent and Tesla climbed 3.7 percent.

"This is a rebound after being slightly oversold last week. It's another example of the "buy the dip" mantra really acting quickly in the tech and AI space," said Ross Mayfield, investment strategy analyst at Baird in Louisville, Kentucky.

"There is nothing structural hitting the AI theme. In fact, a lot of earnings reports have been really strong in that sector."

The S&P 500 climbed 1.5 percent to end the session at 6,832 points.

The Nasdaq gained 2.3 percent to 23,527 points, its biggest one-day percentage gain since May 27.

The Dow Jones Industrial Average rose 0.8 percent to 47,368 points. (Agencies)