The S&P 500 retreated from a record on Friday but held on to solid weekly gains despite a U.S. government shutdown dragging on for a third day.

The broad market index closed little changed, ticking up just 0.01% at 6,715.79, while the Nasdaq Composite declined 0.28% to settle at 22,780.51. The Dow Jones Industrial Average outperformed, trading higher by 238.56 points, or 0.51%, to finish at 46,758.28. The Russell 2000 also popped 0.72% to close at 2,476.18. All four benchmarks had hit all-time highs earlier in the session.

Stocks were knocked down a bit in afternoon trading by declines in key technology names like Palantir Technologies, Tesla and Nvidia. Palantir led the S&P 500's pullback, falling 7.5%, while Tesla and Nvidia dropped more than 1% and almost 1%, respectively. The CBOE Volatility Index spiked, signaling some investors were scrambling to buy some protection against a future S&P 500 decline in the form of put contracts.

Still, the three leading indexes saw a positive weekly finish. The broad market S&P 500 rose around 1.1% on the week, along with the 30-stock Dow, while the tech-heavy Nasdaq increased 1.3%. The small-cap Russell has jumped nearly 2% in the period.

Investors have been overlooking anxieties surrounding the government shutdown, which entered its third day Friday. While the stoppage has exacerbated underlying concerns this year about macroeconomic and policy headwinds, inflation risks and a slowing labor market, investors expect it to be short-lived, thereby limiting potential hits to the U.S. economy. Those on Wall Street also believe that the shutdown won't stop the momentum in the artificial intelligence trade. Shutdowns have not been market-moving events in the past.

The shutdown has led to an economic data blackout, and the Labor Department's pause on virtually all activity has blocked the Friday release of the September nonfarm payrolls report. Although that removes a factor that could lend pressure to stocks, it lessens the amount of economic data the Federal Reserve can take into account for its interest rate decision at its October meeting. Markets largely expect the central bank will lower its key interest rate by a quarter percentage point then, per the CME FedWatch tool.

Adding to ongoing concerns regarding the jobs market, President Donald Trump has threatened massive layoffs and said Thursday that the Democrats have given him an "unprecedented opportunity" to cut federal agencies. Treasury Secretary Scott Bessent also told CNBC Thursday that the current lapse in federal funding could lead to "a hit to the GDP, a hit to growth and a hit to working America." The Congressional Budget Office estimates 750,000 federal workers will be furloughed each day.

Their remarks come a day after private payrolls posted their biggest decline since March 2023 in September, according to ADP. Wednesday's report serves as yet another sign that the labor market is weakening, and some believe that the state of the labor market combined with the shutdown bolster the case for the Fed to cut.

"We view September's mixed, private-sourced substitutes for the Labor Department's delayed jobs report as soft enough to justify another interest-rate cut by the Federal Reserve at the October 29 FOMC meeting," said Jennifer Timmerman, senior investment strategy analyst at Wells Fargo Investment Institute. "Prospects for further rate cutting by the Fed, reinforced by the yellow flag for the economy raised by the latest jobs data, has cemented a rally in stocks and left the yield on the benchmark 10-year Treasury note low enough, at 4.11%, to lift the S&P 500 to a fresh all-time high."