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Investing.com -- The S&P 500 edged up 0.13% to close at 6,728.80 on Friday, but still ended the week lower, while the Dow Jones Industrial Average gained 0.16% to 46,987.10.
The Nasdaq Composite slipped 0.21% to 23,004.54, extending its weekly losing streak as renewed weakness in artificial intelligence stocks and softer economic data deepened worries about a slowdown. At its intraday low, the tech-heavy index was down as much as 2.1%.
Stocks pared losses after Senate Minority Leader Chuck Schumer proposed a short-term funding deal to end the U.S. government shutdown in exchange for extending enhanced Affordable Care Act tax credits.
Still, all three major indexes finished lower for the week, pressured by worries about lofty tech valuations and the narrow leadership in the market. The Nasdaq lost about 3%, its sharpest weekly drop since early April, while the S&P 500 and Dow each fell more than 1%.
Investors remain cautious after weak labor market signals deepened fears about slowing growth. Private data showed layoffs rising sharply and job losses totaling about 9,100 in October, while the Chicago Fed estimated unemployment climbed to a four-year high.
With the government shutdown halting official data releases, traders are increasingly relying on private reports for insight into economic trends.
The lack of key indicators has also complicated the Federal Reserve’s outlook. The central bank cut rates for a second straight meeting in late October, but Chair Jerome Powell said another move in December is not guaranteed.
Markets will now look to smaller private surveys, including Tuesday’s small business optimism index, for clues on the economy’s direction.
Cisco, Walt Disney to report as strong Q3 season enters final stretch
Meanwhile, much of investors’ attention remains on the final stretch of third-quarter earnings season, which has been one of the strongest in years.
Of the 446 companies in the S&P 500 that have reported so far, about 82.5% have exceeded profit forecasts — the highest share since the second quarter of 2021, according to LSEG IBES data released Friday.
Upcoming results this week include Walt Disney and Cisco Systems, with AI chip giant Nvidia scheduled to report the following week. The chipmaker, now the world’s most valuable company, remains a key gauge of investor sentiment around artificial intelligence.
Barrick Mining, Occidental Petroleum, and Applied Materials are also due to post results in the coming days.
What analysts are saying about U.S. stocks
Evercore ISI: “Nearly $500B in capex spend expected by U.S. hyperscalers over the next 12 months has driven an earnings boom in the Mag 7, where EPS growth has consistently outpaced the rest of the index since 2023. Their sustained EPS outperformance vs S&P 493 continues to anchor S&P 500 fundamentals. Index gains have been driven more by earnings than multiple expansion. While top 10 stocks are 40% of the Index, their valuations are not stretched, both a backstop and path to S&P 500 7,750 by year-end 2026.
Evercore ISI Strategy sees the Bull Market intact – recent volatility is a feature of structural Bull markets, the Dotcom Bull regularly saw 10% or deeper “air pockets” – and remains Strategically long the AI theme."
Morgan Stanley: "We have clearer signs that the seasonal weakness in earnings revisions breadth is over, and the next leg higher is underway. While overhangs from Fed guidance and the shutdown have weighed on recent price action, these are temporary headwinds on the way to a solid 2026 driven by earnings growth."
JPMorgan: "If U.S. tariffs are overruled by the Supreme Court, risk assets should take it as a positive, especially the stocks that were more under pressure from trade headwinds. That could in particular help international areas that lagged since Liberation Day, also Eurozone exporters, which are 15%+ behind domestic names ytd, as well as EM plays, in addition to helping some broadening within the U.S. market toward certain laggards."
Wolfe Research: "With the U.S. government shutdown on a path to end by mid-week and earnings season almost over, market focus will shift to year-end trading dynamics and the resumption of government data. On the latter point, we expect that as data is released over the coming weeks, it will paint a very mixed rear-view picture of the U.S. economy. This suggests to us that investors will continue to chase thematic winners, particularly the AI trade, for which we remain bullish from now to year-end."