US stocks finished mixed but well above session lows on Friday as investors welcomed a possible breakthrough in ending a federal government shutdown, and dip-buyers took advantage of the Nasdaq's worst week since April.
The S&P 500 swung from a morning low of -1.3% to a final gain of 0.13%. The Dow Jones Industrial Average gained 75 points or 0.16%. The Nasdaq Composite slashed an early loss of more than 2% to a closing deficit of 0.21%.
The market pared heavy initial losses after Senate Democrats offered a new plan to break a logjam in Congress over government funding. News of a possible end to the impasse came at the end of a week when federal government shutdown became the longest in history and forced airlines to cancel thousands of flights across the weekend due to shortages in air traffic controllers. The deal proposed by the Democrats would include a stopgap measure to fund the government until January while debate continues over longer-term funding. An initial vote could take place as soon as this morning (Sunday night US time) if negotiations progress. If successful in the Senate, an amended bill would have to go back to the House of Representatives for approval, then the president, meaning the process could take several more days.
"A resolution to the shutdown will clearly improve sentiment, particularly at a time when the margin of error is narrow," Terry Sandven, chief equity strategist at U.S. Bank Wealth Management, told Reuters. "Stocks are at all-time highs and valuations are elevated, and if the shutdown gets resolved, it's one less thing weighing on the minds of investors."
The impact of the shutdown on sentiment was underscored by a survey on Friday showing consumer sentiment at its lowest in three years and close to the worst on record. The University of Michigan sentiment index declined 6.2% this month to 50.3 - around 30% lower than this time last year. “With the federal government shutdown dragging on for over a month, consumers are now expressing worries about potential negative consequences for the economy,” Joanne Hsu, survey director, said. “This month’s decline in sentiment was widespread throughout the population, seen across age, income, and political affiliation.”
Friday's market recovery saw five of eleven S&P sectors close more than 1% higher: energy, utilities, real estate, materials and consumer staples. The weakness was centred in two sectors: communication services -0.84% and tech -0.33%. Drags included Oracle, AMD and Broadcom.
The Nasdaq had its worst week since April, shedding more than 3% as investors rotated out of expensive-looking AI stocks into value counterparts. The S&P 500 and Dow fared better with losses of nearer 1%.
Gold regained US$4,000 an ounce as the US dollar retreated and the "risk-off" mood on financial markets boosted traditional alternative stores of wealth. The yellow metal has steadied over the last two weeks after peaking just below US$4,400, then sliding to a one-month low near US$3,900. "The recent price action technically suggests we may be putting in a floor underneath gold and silver prices," Jim Wyckoff, senior analyst at **promotion blocked** Metals, told Reuters. Spot gold rallied US$23.85 or 0.6% to US$4,000.98 an ounce. US gold futures settled US$18.80 or 0.5% ahead at US$4,009.80. Silver gained almost 1%.
A dour week on iron ore markets ended with another downleg on Friday amid gloomy forecasts about Chinese steel demand. Chinese broker Galaxy Futures said steel demand weakened through the third-quarter and it foresaw no improvement in consumption this quarter as China's economy struggles with falling house prices and US tariffs. Benchmark ore futures on the Dalian Commodity Exchange declined 1.87% to US$106.77 a metric ton, a weekly loss of 3.95%. A rival benchmark in Singapore shed 2.46% for a weekly loss of 4.51%.
A retreat in the US dollar helped copper shrug off news that Chinese imports contracted sharply last month as buyers baulked at the recent price rise. Customs data showed China copper imports shrank 9.7% month-on-month in October to the slowest growth in five months. "Copper demand is still growing, but not as strongly as one would expect as of last month," Dan Smith, managing director of Commodity Market Analytics, told Reuters. "The global macro story is reasonably good, with solid PMIs, but China's story has got a bit weaker in October with weak PMI readings and lower copper imports." Benchmark copper futures on the London Metal Exchange firmed 0.32% to US$10,716.50 a metric ton as the US dollar index eased almost 0.2%, reducing prices of dollar-denominated commodities for buyers using other currencies.
Oil lifted after Saudi Arabia reduced the price for its Asian customers to the lowest in 11 months to protect its market share. The Saudis will cut their flagship Arab Light crude to Asia by US$1.20 a barrel next month. The price cut follows an OPEC+ decision to increase production again next month. Brent crude settled 78 US cents or 1.23% higher at US$64.16 a barrel.
