Stocks were choppy Thursday as the government shutdown continued for a second straight day, with no sign of resolution in sight. Still, the three main indexes managed new record closing highs thanks to strength in the technology sector.
At the close, the tech-heavy Nasdaq Composite was up 0.4% to 22,844, the broader S&P 500 had gained 0.06% to 6,715, and the blue-chip Dow Jones Industrial Average was 0.2% higher at 46,519.
Technology was one of just three S&P 500 sectors that advanced Thursday, with its gains supported by several mega-cap semiconductor stocks. On Wednesday, OpenAI said it inked deals with South Korea’s Samsung Electronics and SK Hynix to secure chips and build data centers for the ChatGPT parent’s Stargate project.
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Nvidia (NVDA), for one, added 0.9%, which made it one of the best-performing Dow Jones stocks. Advanced Micro Devices (AMD) jumped 3.5%, while Broadcom (AVGO) added 1.4%.
Berkshire buys OxyChem for $9.7 billion
Elsewhere on Wall Street, Warren Buffett‘s Berkshire Hathaway (BRK.B) said Thursday that it will buy OxyChem, Occidental Petroleum’s (OXY) petrochemical segment, for $9.7 billion in cash.
This marks Berkshire’s largest acquisition since 2022, when it bought insurance firm Alleghany for $11.6 billion, and could be the last for Warren Buffett before he retires as CEO of the holding company at year’s end.
Berkshire already has substantial exposure to Occidental Petroleum. Indeed, OXY was the seventh-largest position in the Berkshire Hathaway equity portfolio at the end of Q2, with Buffett & Co. owning roughly 265 million shares. BRK.B also holds preferred shares of the energy firm, as well as warrants to purchase common stock.
BRK.B stock slipped 0.5% on the news, while OXY plunged 7.3%.
The government shutdown continues
Wall Street received no encouraging news on the shutdown Thursday. U.S. Senators are on break today in observance of Yom Kippur. The soonest a funding bill could be voted on is tomorrow.
Prediction markets such as Kalshi and Polymarket show traders are anticipating the shutdown dragging on for another two weeks or so, which could put a dent in economic growth.
“On average, real quarterly GDP growth has increased 2.2% during periods of government shutdowns and risen over the past six government shutdowns, indicating a limited economic spillover.” says Monica Guerra, head of U.S. Policy at Morgan Stanley Wealth Management.
But Guerra adds that “economic effects could be magnified this time” considering it is a full shutdown vs a partial one. Additionally, “federal job cuts could be higher than usual.”
Private economic data underscores a weak labor market
The delay of economic data due to the shutdown is a pressing issue for Wall Street – especially with a key Federal Reserve meeting on the horizon.
For those wondering, the next Fed meeting, scheduled for October 28-29, will still proceed as planned, even if the shutdown continues through the end of the month. The Fed is an independent agency and is not impacted by the lapse in funding.
But, “the suspension of economic statistical releases will make it harder to track the state of the economy during the shutdown,” says Bill Adams, chief economist at Comerica Bank. “That may cause financial markets to react more than usual to private data releases.”
Today, that data included a report from executive outplacement firm Challenger, Gray & Christmas, which showed that U.S.-based employers cut 54,064 jobs in September. This was down 37% from August and 26% from the year prior.
“Right now, we’re dealing with a stagnating labor market, cost increases, and a transformative new technology,” says Andy Challenger, senior vice president and labor expert for Challenger, Gray & Christmas. “With rate cuts on the way, we may see some stabilizing in the job market in the fourth quarter, but other factors could keep employers planning layoffs or holding off hiring.”
Tomorrow’s economic calendar will not feature the September nonfarm payrolls report, as initially expected, due to the shutdown. Market participants will still see the Institute for Supply Management’s Services Purchasing Managers Index (PMI) and S&P Global’s Services PMI, and hear from a pair of Fed speakers.