Boeing shares surged more than 6% on Monday, leading the Dow Jones Industrial Average, after the company cleared a significant regulatory hurdle.

Boeing announced that the U.S. Federal Aviation Administration has approved the smallest variant in its 737 Max family, the 737 Max 7, for commercial operations. This certification process had been ongoing for nearly a decade, and Wall Street views the approval as another sign of progress in Boeing's recovery.

This development also bodes well for the final certification of the 737 Max 10, which completed its final testing last month. Boeing shares are on track to reach their highest closing price in nearly a month and achieve their largest single-day percentage gain since a 10% increase on December 2. Beyond being the top performer on the Dow, the stock also ranks among the top 10 performers in the S&P 500.

Boeing stated in a release that the FAA's approval "validates the rigor of our aircraft design and recognizes the determination and resilience of our 737 MAX development team." The 737 Max 7, the smallest and longest-range model in the 737 Max family, offers 135 to 160 seats and boasts a range potential about 10% higher than other variants in the series. This positions it as a "sweet spot" for airlines, providing flexibility for domestic and short international routes.

Jefferies analysts noted that as of the end of June, the Max 7 had 282 orders, representing 6% of the 737 Max's total order backlog of 4,846 units. Southwest Airlines is expected to be the launch customer for the 737-7, and its shares rose 3% on Monday. Meanwhile, several of its U.S. competitors saw larger gains, and the U.S. Global Jets ETF climbed 3.6%.

Adding to the positive momentum for Boeing, BNP Paribas analysts upgraded the stock to a "buy" equivalent earlier Monday, citing the certification of both the Max 7 and Max 10 as a key catalyst. The analysts said these certifications "will drive inventory clearing and operational stability" for the company.