U.S. stocks dropped again on Friday, extending a rough week as investors grew increasingly uneasy over high valuations amid the ongoing government shutdown.
By 9:35 a.m. ET (2:35 p.m. GMT), the Dow Jones Industrial Average had tumbled 225 points, or 0.5%, the S&P 500 slipped 40 points, or 0.6%, and the Nasdaq Composite dropped 200 points, or 0.9%.
All three major U.S. indices are headed for weekly losses, dragged down by mounting worries over the tech sector’s sky-high valuations. Ahead of Friday’s open, the S&P 500 had fallen 1.8% for the week, while the 30-stock Dow Jones Industrial Average and the Nasdaq were down nearly 1.4% and 2.8%, respectively.
Fed Faces Uncertainty as Government Shutdown Rattles Markets
Fueling worries over tech sector valuations, this week’s market weakness comes as the U.S. government shutdown stretches into its second month, delaying the release of crucial economic data, including inflation and jobs reports. The blackout has left both investors and the Federal Reserve navigating partly in the dark, complicating the central bank’s judgment on whether further rate cuts are warranted.
Private-sector data offered some insight on Thursday. Challenger, Gray & Christmas reported that U.S. companies announced a staggering 183.1% jump in layoffs in October compared with the previous month — the sharpest monthly surge in decades.
Data from the Bank of America Institute showed that while the labor market hasn’t slowed dramatically since September, it has clearly cooled compared with the spring.
Meanwhile, a separate report from payroll processor ADP, released earlier this week, showed that U.S. private firms added 42,000 jobs last month, rebounding from a revised loss of 29,000 in September and another decline in August.
"[E]conomic data availability remains limited but we view the data in hand as keeping a December rate cut from the Fed more likely than not," wrote Morgan Stanley analysts Michael Gapen and Sam Coffin in a note.
At its October policy meeting, the Fed slashed interest rates by 25 basis points in an effort to curb further weakening in the job market. Still, Chair Jerome Powell warned that another rate cut this year is far from certain.
On Wednesday, the U.S. Supreme Court questioned the legality of President Trump’s tariffs, putting the future of his trade policies in serious doubt.
Wall Street Cheers a Strong Earnings Season
Markets have found a boost from a surprisingly strong earnings season. With the third-quarter reporting period in its final stretch, roughly 83% of the 424 S&P 500 companies that have reported so far have exceeded Wall Street’s expectations.
Airbnb (NASDAQ: ABNB) surged after the company raised its quarterly revenue forecast, powered by strong third-quarter results and booming bookings across Latin America and the Asia-Pacific region.
Affirm Holdings (NASDAQ: AFRM) soared after smashing first-quarter fiscal 2026 expectations and boosting its full-year guidance, sending shares sharply higher.
Take-Two Interactive Software (NASDAQ: TTWO) Take-Two Interactive (NASDAQ: TTWO) tumbled after Rockstar Games confirmed a second delay for Grand Theft Auto VI, now slated for November 2026 instead of May, disappointing fans and investors alike.
DraftKings (NASDAQ: DKNG) tumbled after lowering its full-year sales outlook and posting mixed third-quarter results, amid rising concerns that prediction market services are eating into its core sports betting revenue.
Peloton Interactive (NASDAQ: PTON) jumped after exceeding quarterly revenue expectations, fueled by early momentum from its revamped products and strategic price hikes on hardware and subscriptions.
In a historic move, Tesla (NASDAQ: TSLA) shareholders greenlit a compensation plan for CEO Elon Musk that could see him earn up to $1 trillion in stock over the next ten years.
During Tesla’s annual meeting in Austin, Texas, over 75% of shareholders backed the plan, which hinges on audacious targets such as hitting an $8.5 trillion market cap and launching robotaxis and humanoid robots.
Crude Prices Poised for Weekly Decline
Oil edged higher Friday, yet looked headed for a second consecutive weekly loss as fears of excess supply and weakening U.S. demand weighed on the market.
Brent futures jumped 0.9% to $63.92 a barrel, with U.S. West Texas Intermediate (WTI) crude also up 0.9%, reaching $60.00 a barrel.
Crude contracts look set to fall about 2% this week, extending a two-week losing streak, following OPEC+’s decision to slightly boost production in December.
OPEC+ also paused further production hikes for the first quarter of next year, wary of flooding the market with excess supply.
Compounding the concerns, U.S. crude stocks climbed beyond expectations, raising alarm over slowing demand amid the nation’s longest-ever government shutdown.
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