US stocks ticked higher on Friday, extending weekly gains for major indexes even as Washington’s government shutdown dragged into a second week and Federal Reserve officials signalled caution on future interest rate moves.
The S&P 500 rose 0.2%, while the Nasdaq Composite advanced by the same margin.
The Dow Jones Industrial Average added 156 points, or 0.3%.
Despite limited catalysts and the ongoing budget standoff, both the S&P 500 and Nasdaq were on track for modest weekly gains of 0.5% and 1.3%, respectively.
The Dow, however, was heading for a 0.5% weekly decline.
Shutdown stalemate weighs on market momentum
The US government shutdown entered its tenth day on Friday, with lawmakers failing again to pass temporary funding measures.
The Senate rejected duelling stop-gap proposals on Thursday for the seventh time, underscoring the deep partisan divide between Republicans and Democrats.
The prolonged impasse has created uncertainty among investors, with the absence of key economic data releases complicating market forecasts.
Earnings reports from Delta Air Lines and PepsiCo on Thursday offered some reassurance about consumer demand, but they were not enough to sustain Thursday’s rally.
Market participants now look ahead to the start of the third-quarter earnings season next week, when major banks, including Citigroup and JPMorgan, are set to report results.
Data on US consumer sentiment is also scheduled for release Friday morning at 10 am ET.
Fed Governor Waller backs rate cuts
Federal Reserve Governor Christopher Waller said on Friday that he still supports lowering interest rates but emphasised the need for prudence given conflicting economic signals.
“I’m still in the belief we need to cut rates, but we need to kind of be cautious about it,” Waller said in a CNBC interview.
He noted that while the US labour market appears to be losing momentum — a possible sign of broader economic slowdown — GDP growth remains robust, and inflation continues to run above the Fed’s 2% target.
“Something’s got to give. Either the labor market rebounds to match the GDP growth, or that GDP growth is going to pull back,” Waller said.
“I want to move towards cutting rates, but you’re not going to do it aggressively and fast, in case you make a big mistake on which way that things go.”
Fed Chair search narrows to five candidates
Separately, Treasury Secretary Scott Bessent has narrowed the list of candidates for the next Federal Reserve chair to five from an initial group of eleven, according to a CNBC report.
Those still under consideration reportedly include Vice Chair for Supervision Michelle Bowman and National Economic Council Director Kevin Hassett.
Additional interviews with all five candidates are expected over the coming weeks and months.
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