The Nasdaq closed lower but the S&P 500 and the Dow eked out late-session gains on Friday as investors turned the page on a roller-coaster week with economic worries, the longest-ever federal government shutdown, and sky-high tech stock valuations dampening risk appetite.
All three major U.S. stock indexes spent much of the session sharply lower, but losses shrank, with the S&P 500 and the Dow turning higher late in the day following reports of progress on the congressional impasse which has resulted in the longest federal government shutdown in U.S. history.
"A resolution to the shutdown will clearly improve sentiment, particularly at a time when the margin of error is narrow," said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management in Minneapolis. "Stocks are at all-time highs and valuations are elevated, and if the shutdown gets resolved, it's one less thing weighing on the minds of investors."
All three indexes lost ground from last Friday's close, with the Nasdaq registering its largest weekly percentage drop since late March/early April amid mounting concerns over inflated valuations of artificial intelligence-related momentum stocks, which have provided much of the upside muscle to the stock market's rally over recent months.
"Ups and downs and periods of consolidation are part of the normal ebb and flow of a bull market," Sandven added.
Concerns arising from the government shutdown were apparent in the University of Michigan's preliminary take on November Consumer Sentiment, which fell to its lowest level in over three years. Survey participants' assessment of current conditions plunged to its most pessimistic reading in the survey's history. Overall sentiment has slid 29.9% since November 2024, when U.S. President Donald Trump was elected to his second term in the Oval Office.
The shutdown has also led to a blackout of official economic indicators, complicating the Federal Reserve's dual mandate of promoting full employment and price stability.
"Flying in the dark in the absence of economic data due to the shutdown is weighing on investors as well, adding a layer of uncertainty," said Ryan Detrick, chief market strategist at Carson Group in Omaha. "We know earnings were strong, but the housing market is weak."
"Clearly the labor market is weakening and investors are taking a 'sell first, ask questions later' mentality so far in November."
On the trade front, Beijing has begun creating a new rare earth licensing program that could speed up shipments but is likely to fall short of Washington's hopes for a complete rollback of restrictions.
The Dow Jones Industrial Average rose 74.80 points, or 0.16%, to 46,987.10, the S&P 500 gained 8.48 points, or 0.13%, to 6,728.80 and the Nasdaq Composite lost 49.45 points, or 0.21%, to 23,004.54.
Third-quarter reporting season continued to barrel toward its conclusion, with 446 of the companies in the S&P 500 having reported. Of those, 83% have delivered better-than-expected earnings, according to LSEG data.
Analysts now predict year-on-year S&P 500 earnings growth of 16.8% for the July-September period, a significant improvement over the 8.0% annual growth.
Microchip Technology shares dropped 5.2% after forecasting quarterly net sales below estimates.
Tesla shareholders approved the largest corporate pay package in history for CEO Elon Musk. The electric vehicle maker's shares fell 3.7%.
Shares of Expedia surged 17.6% after the travel platform reported solid bookings from its business-to-business segment.
Block slumped 7.7% after missing third-quarter profit expectations, and Take-Two Interactive fell 8.1% following the company's decision to delay the launch of its popular video game Grand Theft Auto VI to November 2026.
Advancing issues outnumbered decliners by a 1.44-to-1 ratio on the NYSE. There were 97 new highs and 195 new lows on the NYSE.
On the Nasdaq, 2,422 stocks rose and 2,201 fell as advancing issues outnumbered decliners by a 1.1-to-1 ratio.
The S&P 500 posted 14 new 52-week highs and 14 new lows while the Nasdaq Composite recorded 43 new highs and 323 new lows.
Volume on U.S. exchanges was 20.15 billion shares, compared with the 20.77 billion average for the full session over the last 20 trading days.
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