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Applied Materials ( AMAT ) flags $600 mln revenue hit in 2026

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USA Rare Earth ( USAR ) rises after report of talks with White

House

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U.S. government shutdown goes on for 3rd day

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Indexes: Dow up 0.5%, S&P 500 up 0.01%, Nasdaq down 0.3%

(Updates close with volume, share moves)

NEW YORK, Oct 3 (Reuters) - The S&P 500 eked out a

record closing high in a volatile session Friday, with interest

rate-cut expectations holding up as the U.S. government shutdown

went on for a third day.

The Dow also posted a record closing high, but the Nasdaq ended

lower.

The S&P 500 technology sector eased, with shares of

Applied Materials ( AMAT ) declining 2.7% after the

chip-equipment maker late Thursday forecast a $600 million hit

to fiscal 2026 revenue.

Shares of Tesla were 1.4% lower, while utilities

rose 1.2% and led gains among S&P 500 sectors.

The U.S. nonfarm payrolls report for September was due for

release on Friday, but was not published due to the government

closure. Investors were still able to digest a survey by the

Institute for Supply Management, which showed the services

employment index contracted for the fourth consecutive month.

The news underscored the case for more interest rate cuts from

the Federal Reserve.

"It certainly feels like momentum is on the side of investors

over the last few days," said Mona Mahajan, head of investment

strategy at Edward Jones.

It seems like "the market probability of a Fed rate cut has

actually gone up since the shutdown began," she said. "Maybe

that's because there's the potential impact on the economy or

some weaker jobs data this week or this morning's ISM data...

the expectation is we're still in this environment where the Fed

is going to cut rates."

The Fed cut rates in September for the first time since December

amid recent labor market weakness. On Wednesday, a report showed

a decline in private payrolls of 32,000 and a downwardly revised

3,000 decline in August.

The Dow Jones Industrial Average rose 238.56 points, or

0.51%, to 46,758.28, the S&P 500 gained 0.44 points, or

0.01%, to 6,715.79 and the Nasdaq Composite lost 63.54

points, or 0.28%, to 22,780.51.

For the week, the Dow gained 1.1%, the S&P 500 also climbed 1.1%

and the Nasdaq rose 1.3%.

The market has historically shrugged off government shutdowns,

but some strategists said that a longer shutdown could create

more uncertainty for investors and for Fed policymakers.

"The market generally looks past government shutdowns

because they don't usually last long and they don't have a

longer-term negative impact on the economy," said Anthony

Saglimbene, chief market strategist at Ameriprise Financial in

Troy, Michigan.

"But the longer it goes... it means the data collection for

really important reports could get delayed, or it could cloud

some of the data that we will eventually get because the data

collection wasn't happening over an extended period."

Chicago Fed President Austan Goolsbee said he was hesitant

to commit to a series of rate cuts with inflation still running

above the target.

According to the CME Group's FedWatch Tool, traders see a

25-basis-point cut at the Fed's October meeting as almost

certain and are pricing in an 84% probability of an additional

cut in December.

Shares of USA Rare Earth ( USAR ) rose 14.3% after CEO

Barbara Humpton told CNBC the company was "in close

communication" with the White House.

Advancing issues outnumbered decliners by a 1.72-to-1 ratio

on the NYSE. There were 686 new highs and 55 new lows on the

NYSE.

On the Nasdaq, 2,813 stocks rose and 1,880 fell as advancing

issues outnumbered decliners by a 1.5-to-1 ratio.

Volume on U.S. exchanges was 20.47 billion shares, compared

with the 19.01 billion average for the full session over the

last 20 trading days.

(Additional reporting by Niket Nishant and Sukriti Gupta in

Bengaluru; Editing by Krishna Chandra Eluri, Pooja Desai and

Aurora Ellis)