U.S. stocks drifted between gains and losses on Monday, as investors anxiously awaited a resolution to the partial government shutdown that is now in its third week. The impasse will come to a head on Friday when the majority of government workers impacted by the shutdown miss their first full paycheck.

Nasdaq, Dow Mixed

Equity markets struggled for direction at the start of the week. The Dow Jones Industrial Average declined by as much as 132 points on Monday but has since pared most of those losses. At the time of writing, the blue-chip index was down 35 points, or 0.2%.

The Dow opened in positive territory on Monday before continuing lower mid-morning. Read more: Dow Opens to Minor Monday Gains as US-China Trade Talks Ramp up.

The broad S&P 500 Index climbed 0.2%, where it traded close to its daily high. Gains were concentrated in the consumer discretionary sector, which has a total market cap of nearly $4.4 trillion. Consumer staples and utilities, which are known for their defensive posture, were down sharply.

Meanwhile, the technology-focused Nasdaq Composite Index rose 0.5%.

Stocks extended their relief rally on Friday after government data showed the strongest pace of hiring in ten months. U.S. nonfarm payrolls surged by 312,000 in December as average hourly wages rose 3.2%, the highest annual growth rate since 2009.

Wall Street’s sharp rebound is reflected in the CBOE Volatility Index, also known as the VIX. The so-called “fear index” declined more than 24% last week. It opened higher on Monday and currently sits at 22.25 on a scale of 1-100 where 20 represents the historic average.

Government Shutdown: No End in Sight

The partial U.S. government shutdown entered its third week over the weekend, with Republicans and Democrats still clashing over President Trump’s proposed border wall. The White House tabled an official proposal to Democratic staff on Sunday, which included $5.7 billion in funding for a steel barrier on the U.S.-Mexico border and $800 million in additional appropriation for processing centers.

However, the document appears to be a non-starter for Democrats, who had previously called for commensurate cuts in Department of Homeland Security funding.

The prospect of a government shutdown roiled investor confidence last month, sending stock prices sharply lower. Although markets appear to be getting back on track, the impact of a prolonged shutdown on government workers could be a major source of concern. This Friday will mark the first time that the majority of government workers affected by the shutdown will miss a full paycheck.

Featured image courtesy of Shutterstock. Chart via TradingView.