Selling continued on Wall Street to start Friday, with sentiment taking a hit from lofty equities valuations and the ongoing government shutdown. But two of the three main indexes finished in positive territory as media reports refreshed hope that the funding standoff could end sooner rather than later.
The October jobs report was slated to be released today, but due to the government shutdown, the data are delayed for a second month in a row. Based on the private data we've seen, Comerica Chief Economist Bill Adams believes "employment likely fell in October as weak private hiring failed to offset a drop in federal employment as workers who took buyout packages early this year fell off of payrolls."
The economic calendar did feature the University of Michigan's Consumer Sentiment Index, which showed just how big of a hit sentiment is taking due to the shutdown. Indeed, the index plunged to 50.3 in November from October's 53.6 – its lowest level since June 2022 and second-lowest reading since at least 1978.
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"With the federal government shutdown dragging on for over a month, consumers are now expressing worries about potential negative consequences for the economy," says Surveys of Consumers Director Joanne Hsu.
Consumers' expectations of current personal finances dropped 11%, while those for year-ahead business conditions fell 11%. Declines were seen across most demographics, though sentiment among consumers with the largest amount of stock holdings was up 11% as the equities market traded near record highs.
"The record-long government shutdown is the primary factor worsening household confidence, which is limiting personal pocketbooks at a time when price pressures and softening labor demand are weighing on consumption prospects," says José Torres, senior economist at Interactive Brokers.
Torres notes that investors are responding by "scooping up safe-haven assets," including gold (+0.4% at $3,999.40 per ounce), and reducing exposure to riskier assets.
Indeed, the tech-heavy Nasdaq Composite fell 0.2% to 23,004. The broader S&P 500 managed a 0.1% gain to end at 6,728 and the blue-chip Dow Jones Industrial Average added 0.2% to 46,987.
All three indexes finished well off their session lows after a CNBC report detailed Democrats' new plan to pass a short-term funding bill in exchange for a one-year extension of Affordable Care Act (ACA) tax credits.
For the week, the Dow dropped 1.4%, the S&P 500 lost 1.8%, and the Nasdaq slumped 3.2%.
Block stock sinks after earnings miss
In single-stock news, Block (XYZ) tumbled 7.7% after the payments processor reported lower-than-expected third-quarter earnings and revenue.
Still, Argus Research analyst Stephen Biggar reiterated a Buy rating on the financial stock after Block said its gross payment volume improved from Q2 to Q3 and it raised its full-year gross profit growth forecast.
"Over the long term, we believe that Block is taking advantage of the changing payments landscape, including the greater use of mobile devices for payments and the technological integration of different payment channels," Biggar says.
Tesla tumbles after shareholders approve Musk's massive pay package
Tesla (TSLA) was another notable decliner, falling 3.7% after the company on Thursday said that more than three-quarters of its shareholders approved a new package for CEO Elon Musk that could be worth up to $1 trillion.
Wedbush analyst Daniel Ives, who has an Outperform (Buy) rating and Street-high $600 price target on the Magnificent 7 stock, says the vote allows Tesla to keep its "biggest asset, Musk, as its leader for the foreseeable future."
Ives believes Tesla could hit a $2 trillion market cap – one of the major milestones in Musk's new pay package – by early 2026 and $3 trillion by the end of next year "as full-scale volume production begins of the autonomous and robotics roadmap."
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