U.S. stocks retreated from their previous all-time highs on Thursday, with investors scrambling for direction as they remained deprived of economic data owing to the ongoing government shutdown. All three major indexes ended in negative territory.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) slid 0.5%, or 243.36 points, to end at 46,358.42 points.   

The S&P 500 declined 0.3%, or 18.61 points, to finish at 6,735.11 points. Industrials, materials and consumer discretionary stocks were the worst performers.

The Materials Select Sector SPDR (XLB) fell 1.4%, while the Industrials Select Sector SPDR (XLI) lost 1.5%. The Consumer Discretionary Select Sector SPDR (XLY) declined 0.5%. Ten of the 11 sectors of the benchmark index ended in negative territory.

The tech-heavy Nasdaq lost 0.1%, or 18.75 points, to close at 23,024.63 points.

The fear gauge, CBOE Volatility Index (VIX), was up 0.80% to 16.43. Decliners outnumbered advancers on the NYSE by a 2.91-to-1 ratio. On the Nasdaq, a 1.75-to-1 ratio favored declining issues. A total of 20.44 billion shares were traded on Thursday, higher than the last 20-session average of 19.75 billion.
On the Nasdaq, there were 1,694 new highs and 2,966 new lows. On the NYSE, there were 354 new highs and 91 new lows.

Wall Street Rally Loses Steam

Stocks pulled back on Thursday, pausing the ongoing rally, with the S&P 500 and Nasdaq both retreating from their all-time closing highs achieved in the previous session.

The Dow ended marginally lower, with NVIDIA Corporation (NVDA Quick QuoteNVDA - Free Report) helping the blue-chip index limit its losses after several industry bellwethers weighed on the index. Shares of NVIDIA gained 1.8% on Thursday, a day after the company’s CEO Jensen Huang said in an interview that the semiconductor giant has seen a surge in demand over the past few months. NVIDIA currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Also, Oracle Corporation’s (ORCL Quick QuoteORCL - Free Report) shares rose 3.1% on Thursday, a day after it declined following a report that the company is generating far lower margins on its cloud business than the current forecasts of analysts.

Tech stocks, especially AI stocks, have been powering the ongoing rally. On Thursday, the losses suffered by blue-chip companies were to a great extent restricted again by the tech stocks.

Government Shutdown Dents Investors' Sentiment

The sudden pause in Thursday’s rally was also largely due to declining consumer sentiment caused by the ongoing government shutdown. Investors, deprived of any economic data, over the past few days, are struggling to gauge the future of the economy’s health and the Federal Reserve’s plans for the next interest rate cut.

This came as the Senate failed to pass a funding proposal for the seventh time on Thursday, with the government shutdown now entering its ninth day.

Historically, government shutdowns have not impacted markets much, but concerns may arise about the economy’s health if it continues for a longer period.

Investors are also trying to shift focus to the third-quarter earnings season, which begins this week and will gain pace from next week.