US stocks pare losses on shutdown hope as weekly win streak ends

US stocks snapped a three-week run of gains on Friday as investors continued to fret about stretched valuations in the tech sector, but saw a silver lining in Washington lawmakers restarting negotiations over the government shutdown.

The S&P 500 Index finished 0.1% higher in New York, paring a decline of more than 1.3% earlier in the session as traders assessed signs that the US government shutdown is nearing its end. The benchmark traded below its 50-day moving average earlier in the session. The tech-heavy Nasdaq 100 Index dropped 0.3%, also ending a three-week win streak. Block Inc., Microchip Technology Inc. and Take-Two Interactive Software Inc. were some of the biggest decliners.

Meanwhile, the Cboe Volatility Index hovered around 19. It had gone above 20 earlier in the session, a watermark that often signals mounting market stress.

“Given the froth of valuations, this is a healthy correction, more of a reversion to the mean than an indictment of the AI narrative,” said Louis Navellier, chief investment officer at Navellier & Associates.

The latest round of nonfarm payrolls data has been delayed because of the government shutdown. However, private data released earlier this week paints a picture of a softening labor market.

“We think this cooling keeps the Fed’s rate cut plans alive for December and potentially into early 2026,” said Glen Smith, chief investment officer at GDS Wealth Management. “While the labor market is softening, it’s not severe enough to suggest that any kind of recession is on the horizon anytime soon.”

Data from Challenger, Gray & Christmas Inc. on Thursday showed companies had announced the most job cuts for any October in more than two decades, as artificial intelligence reshapes industries and cost-cutting accelerates.

To Jennifer Timmerman, senior investment strategy analyst at Wells Fargo Investment Institute, recent high-profile layoff announcements “likely overstate” weakness in the job market.

“All in, the data we do have in hand remain consistent with our constructive economic outlook for 2026 from a soft patch at the turn of the year, and we look for policy-related tailwinds already in the pipeline — including tax cuts, monetary stimulus, and deregulation — to spur a reacceleration of economic growth beyond the early part of next year,” Timmerman said.

Still, the shutdown will likely impact gross domestic product growth in the US, according to President Donald Trump’s economic advisor Kevin Hassett.

“We were thinking that we have at least 3% growth in the fourth quarter. I think now we’re expecting something like half of that,” Hassett said on Fox Business.

Valuation Concerns

Tech stocks have sold off throughout the week, with beneficiaries of the artificial intelligence rally taking a step lower. Results from Palantir Technologies Inc., Super Micro Computer Inc., and Qualcomm Inc. left investors feeling underwhelmed.

The stock market’s euphoria has quickly been overtaken by a bout of skepticism, hitting mega-cap technology companies that have led the AI rally. Concerns have centered on who is going to provide all the funds needed to finance lofty ambitions of OpenAI, which sits at the center of the investment theme that has pumped billions of dollars into the equity market.

Earlier this week, hedge fund manager Michael Burry disclosed bearish wagers on Palantir and Nvidia Corp., which fueled concerns over stretched valuations and whether the tech rally could be running out of steam. However, GDS Wealth Management’s Smith sees an opportunity for investors.

“Some big tech stocks are on sale, and are presenting buying opportunities for investors, especially for investors who have missed out on the market’s strength over the past two months,” he said.

Tesla Inc. traded lower after shareholders approved a $1 trillion compensation package for Chief Executive Officer Elon Musk. It’s the largest payout ever awarded to a corporate leader.

“Everyone is getting caught up on the big number and what it means for Musk’s remuneration,” said Kyle Rodda, senior analyst at Capital.com. “But the bonus is only secured if he achieves some pretty ambitious goals and that’s far from assured.”

In single stock moves, Take-Two Interactive dropped after the video-game maker delayed the release of the highly-anticipated Grand Theft Auto VI once again. Block tumbled after the fintech platform reported an adjusted earnings and net revenue miss.

CNH Industrial NV fell after cutting guidance and noted that the August expansion of US steel and aluminium tariffs put pressure on its business. Sweetgreen Inc. plunged to a record low after the restaurant chain cut its revenue guidance for the year and received a downgrade from William Blair. Monster Beverage Corp. gained as the energy drinks company’s third-quarter results topped estimates.