Stocks closed mixed Friday, but ended with notable weekly gains even as the government shutdown dragged on for a third day. Blue chips outperformed with health insurer UnitedHealth Group (UNH) and construction giant Caterpillar (CAT) lifting the Dow Jones Industrial Average to another record closing high.
Indeed, the Dow finished Friday up 0.5% at 46,758. The broader S&P 500 (+0.01% at 6,715) also notched a fresh all-time closing high, while the tech-heavy Nasdaq Composite (-0.3% at 22,780) slipped in late-day selling. The three main indexes ended with weekly gains ranging between 1.2% and 1.4%.
UnitedHealth emerged as one of the best Dow Jones stocks today, adding 1.8%. UNH shares are now up nearly 20% since it was revealed in mid-August that the health care stock had been added to the Berkshire Hathaway equity portfolio.
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Caterpillar wasn't far behind, rising 1.5%. In late September, BofA Securities analyst Michael Feniger lifted his price target on the old-school industrial stock to $517 from $495, calling the company's Solar Turbines subsidiary a "hidden gem."
The company's reciprocating engine and turbines "are increasingly being utilized for backup AND prime solutions on data centers," and high demand for these products "suggests growth upside," the analyst explains.
Shares are up more than 6% since Feniger's price-target hike and are 37% higher for the year to date.
Jefferies eyes 20% downside for Apple
Elsewhere on the Dow, Apple (AAPL) edged up 0.4% even after Jefferies analyst Edison Lee downgraded the mega cap to Underperform (the equivalent of Sell) from Hold. The analyst also trimmed his price target to $205.16 from $205.82, representing implied downside of 20% to current levels.
Lee cited an "overly bullish iPhone outlook" for his bearish stance, noting that strong demand for the iPhone 17 is already priced into the blue chip stock.
ISM data in focus after shutdown delays jobs report
Wall Street was supposed to hear the latest labor market update this morning with the scheduled release of the September jobs report. However, the employment data are delayed due to the ongoing government shutdown.
This made the Institute for Supply Management's (ISM) Services Purchasing Managers Index (PMI) the most important report on Friday's economic calendar.
The ISM Services PMI fell to 50% in September from 52% in August. This is the first time the index arrived at 50 – the breakeven point between expansion and contraction – since January 2010.
"The large U.S. services sector stalled in September, while price pressures intensified likely due to tariffs," says Sal Guatieri, senior economist at BMO Capital Markets. "Business activity contracted slightly and for the first time since the 2020 shutdowns," while "staffing levels shrank for a fourth straight month."
Guatieri notes that the shutdown puts the Fed in a tough spot due to the delay of economic data. "But if other economic indicators also land on the soft side, it will likely bite its lip over sticky inflation and cut rates again later this month."
According to CME Group FedWatch, futures traders are currently pricing in a 97% chance the central bank cuts rates by a quarter-percentage point at its meeting later this month – up from 88% one week ago. The probability of another rate cut in December is 85%.
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