Nasdaq 100 and S&P500: Mid-Session Reversal May Signal Weaker Momentum into Close

S&P 500, Nasdaq Hit Records but Pull Back as Fed Cut Bets Offset Shutdown Concerns

U.S. equity benchmarks opened Thursday by hitting fresh intraday highs, with the S&P 500 briefly topping 6,700 and the Nasdaq reaching new territory. But gains faded as concerns over the ongoing government shutdown tempered optimism tied to rising expectations for a Federal Reserve rate cut.

The S&P 500 was last down 0.2%, the Dow shed 85 points, and the Nasdaq held on to a modest 0.1% gain thanks to strength in tech.

Despite the shutdown entering its second day, traders remain focused on the Fed, viewing weaker labor data as a green light for policy easing. Comments from Treasury Secretary Scott Bessent that the shutdown could dent GDP were acknowledged but largely shrugged off by equity markets.

Will the Federal Reserve Cut Rates Without Fresh Labor Data?

With official data delayed, market participants are leaning on private reports. Challenger, Gray & Christmas said layoffs slowed in September, but hiring intentions fell to the weakest levels since 2009. That followed Wednesday’s ADP report, which missed estimates on private payroll growth. Weekly jobless claims, a key labor gauge, were not released due to the shutdown.

This alternative data has pushed rate cut odds higher. Traders are now leaning toward a 25-basis-point cut at the Fed’s upcoming meeting, especially if the shutdown drags into next week. Fed officials are expected to maintain a data-dependent stance, but without new government reports, the bar for easing may be lower.

Technology and Materials Lead, While Financials and Consumer Names Lag

At the sector level, tech remained the standout, rising 0.41%, lifted by ongoing enthusiasm for AI and chip stocks.

Materials added 0.44%, showing relative strength.

Financials dropped 0.45%, and consumer discretionary fell 0.52%, weighed down by concerns over rates and demand.

Real estate and utilities also declined, with both sectors sensitive to rate policy and growth expectations.

Energy slipped 0.33%, even as Occidental made headlines with a major asset sale. Industrials held steady, while healthcare posted modest losses.

Which Stocks Are Driving the Action?

FICO surged 30.1% after launching a mortgage scoring tool that bypasses credit bureaus, making it the top gainer in the S&P 500. In contrast, Equifax dropped 8.4% and TransUnion plunged 11.4% on fears of revenue erosion from the FICO move.

Occidental Petroleum slid 4.2% after selling its petrochemical division to Berkshire Hathaway for $9.7 billion. Nvidia added to its rally, notching a new all-time high and helping keep the Nasdaq in positive territory.

Other notable gainers included Advanced Micro Devices (+3.6%) and Microchip Technology (+3.3%). On the downside, Tesla slipped 2.6%, while Applovin dropped over 3.6%.

How Long Can Rate-Cut Hopes Support Equities?

Traders are closely watching how long the shutdown persists, with the Senate out until Friday. A delay in the nonfarm payrolls report only adds to the uncertainty. Still, as long as rate cut odds stay firm and AI momentum persists, equities may find support.

Short-term direction will hinge on fresh labor indicators and political developments. Expect elevated sensitivity to headlines as the week closes out with little in the way of scheduled data.

Technically, the S&P 500 and Nasdaq-100 are ripe for potentially bearish closing price reversal tops. If formed and confirmed on Friday, this could trigger a shift in momentum for a few days. However, it will not change the trend.

More Information in our Economic Calendar.