Weekly Market Update – October 31, 2025

Quick Takes

• The S&P 500 and Nasdaq Composite each hit their 36th all-time high of the year during the beginning of the week, and each marked three week win streaks with gains of +0.7% and +2.2% respectively. However, the small cap Russell 2000 fell -1.4% for the week.
• It was a busy week of Q3 earnings reports, and with 64% of S&P 500 companies having reported so far, the index is on pace for annualized earnings growth of nearly 11%. 83% of firms have beaten Wall Street estimates, well ahead of the 5-year and 10-year averages.
• As expected, the Fed cut rates by a quarter point, but in the post-meeting press conference, Fed Chairman Powell poured cold water on the prospect for a December cut. Powell stated that a December cut, which was fully priced in by the market, isn’t a foregone conclusion. 

Source: Bloomberg. Data as of October 31, 2025.
Price Returns for Equity, Total Returns for Bonds.
* The term basis points (bps) refers to a common unit of measure for interest rates and other percentages in finance. One basis point is equal to 0.01%. Bond prices and bond yields are inversely related. As the price of a bond goes up, the yield decreases.

Stocks Hit 3-Week Win Streak, Bonds Snap 4-week Streak

The S&P 500 Index and Nasdaq Composite Index both closed the week with three-week win streaks, but under the surface stocks were much more mixed than in prior weeks. The S&P 500 was up +0.7% for the week and sits just three-quarters of a percentage point from its all-time high that it set on Tuesday, its 36th record high of 2025. A day later, on Wednesday, the technology-heavy Nasdaq hit its 36th record high of the year, and closed the week up +2.2%, just -1% below that latest all-time high. However, the small cap Russell 2000 Index lost ground for the week, falling -1.4%, despite starting by closing at its fourth record high of 2025 on Monday. The Technology sector was the big winner of the week, up +3.0%, followed by Consumer Discretionary, which added +2.8% for the week. But unlike the previous two weeks, in which virtually all sectors were positive, last week saw much more discerning performance. Seven of the eleven S&P 500 sectors were negative last week, with Real Estate dropping -3.9%, and Materials and Consumer Staples the next biggest laggards, each losing -3.7%. Utilities, Financials, Health Care, and Energy were also negative for the week.

With a scarcity of economic data amid the ongoing government shutdown, an onslaught of earnings reports last week drove much of the week’s narrative, with particularly strong earnings from several of the big-tech Magnificent Seven (Mag 7) cohort. Five of the Mag 7 companies reported their results last week. Google parent Alphabet, Amazon, Apple, Meta Platforms (Facebook), and Microsoft all reported third quarter earnings. About 64% of S&P 500 companies have reported so far this quarter, and they are beating Wall Street earnings estimates at a historically high rate. According to FactSet, 83% of companies have beaten earnings estimates, which is well ahead of the 5-year and 10-year averages of 78% and 75%, respectively. Overall, 8 of 11 sectors are reporting year-over-year earnings growth for the quarter, with the S&P 500 at a +10.7% annualized growth rate, much better than the +7.9% forecast on September 30. Last week’s performance reflects Technology’s earnings leadership, with the sector leading the way with a growth rate of +27%. Utilities and Financials are next best at +21% each. Communication Services and Energy are the laggards at -7% and -2% respectively.

Beyond the earning news, a quasi-US-China trade deal and a Federal Open Market Committee (FOMC) meeting made some headlines. At a Thursday meeting in South Korea, President Donald Trump and Chinese President Xi Jinping agreed to a one-year trade truce, which will see a reduction of US tariffs on Chinese imports, a suspension of China’s export controls on rare earth materials, a resumption of China’s purchases of US soybeans and other agricultural products, and included a pledge from China to work to stop the flow of fentanyl into the US. While the concessions in the agreement were relatively modest, the truce between the world’s two largest economies boosted investor sentiment. 

There wasn’t much news from Wednesday’s FOMC meeting decision to lower its target rate range a quarter-point to 3.75% – 4% from 4% – 4.25% – a widely expected result. There were dissents from Fed Governor Stephen Miran, who favored a half-point rate cut, and from Kansas City Fed President Jeffrey Schmid, in favor of leaving rates unchanged. However, what wasn’t expected was when Fed Chair Jerome Powell opened his post meeting press conference by stressing that a further rate cut in December, which was fully priced in by the market, isn’t a foregone conclusion. Powell emphasized that there were strongly differing views on the committee, and some think it would be wise to skip a meeting amid signs of stronger growth, still sticky inflation, and the government data blackout. The 10-year US Treasury yield rose to 4.06% from 3.98% on Wednesday, its largest one-day climb since July. Odds of a December cut fell from 100% the day before the meeting to 61% Friday morning, while yields jumped higher.

By the close on Friday, US Treasury yields were higher across the curve. The benchmark 10-year US Treasury yield ended the week up +8 basis point at 4.08%, the 2-year UST yield was up +9 basis points to 3.57%, and the 30-year UST yield rose +6 basis points to 4.65%. With yields up, bond returns were down (bond yields and returns move in opposite directions). The Bloomberg U.S. Aggregate Bond Index broke a four-week win streak with a -0.6% return. Non-US bonds slipped last week as well, with the Bloomberg Global Aggregate ex U.S. Bond Index returning -0.4% following a -0.5% loss the previous week.

Chart of the Week

The Conference Board’s Consumer Confidence Index slipped to 94.6 in October from an upwardly revised 95.6 the prior month (originally 94.2). That was above Wall Street expectations for an increase to 93.4. In the same period a year ago, the index stood at 109.6. The Present Situation gauge rose to 129.3 from 127.5 the prior month after it was revised lower from the originally reported 125.4. The Expectations gauge — which reflects consumers’ six-month outlook — declined to 71.5 from 74.4 the prior month (revised higher from to 73.4). Sustained levels below 80 on the expectations index can signal a recession within the next year, while in good times the index can top 120 or more. “Consumer confidence moved sideways in October, only declining slightly from its upwardly revised September level,” said Stephanie Guichard, Senior Economist, Global Indicators at The Conference Board.

Consumer Confidence was Little Changed in October

US Consumer Confidence and Component Indices

Source: Conference Board, Briefing.com.

The Week Ahead

With the government shutdown entering its second month, this week’s economic reports will remain on the light side. The Institute for Supply Management (ISM) and S&P Global will release their respective Purchasing Managers Indices (PMIs), with the Manufacturing PMIs on Monday and the Services PMIs coming Wednesday. Other than that, we can expect the weekly MBA mortgage applications on Wednesday, and then it is quiet until Friday when Consumer Sentiment and Consumer Credit reports are released. 

Third-quarter earnings season rolls on with about a third of S&P 500 companies left to report, of which 132 will report this week. Some notable reports include Palantir Technologies and Vertex Pharmaceuticals on Monday, followed by Advanced Micro Devices and Pfizer on Tuesday. McDonald’s, Qualcomm, and Robinhood Markets announce their results on Wednesday, while Airbnb and ConocoPhillips follow suit on Thursday. Constellation Energy, Duke Energy, and KKR round out the week on Friday.

Other activity that may garner attention comes on Wednesday when the Supreme Court will hear oral arguments in cases challenging the legality of the Trump administration’s tariffs.

*Data subject to delay if government shutdown continues

Did You Know?

RECORD REVENUE BEATS – 82% of the first 150 companies reporting earnings during the Q3 earnings season, which unofficially began on October 13, reported stronger than expected revenues versus consensus analyst expectations. That’s the highest revenue beat rate for the cohort of 150 companies since at least 2001. (Source: Bespoke)

WISER WITH AGE – 33% of middle-class Americans over 70 say they have “a lot” of working knowledge about personal finance compared to less than 18% of those in their 40s and 50s. Nearly half (47%) of middle-class Americans in their 70s also use a professional financial advisor compared to less than 30% of those in their 40s and 50s. (Source: Transamerica)

NO POTHOLES – Dating back to mid-April, the S&P 500 has gone 170+ trading days without a -3% pullback — one of the 10 longest stretches since 1953. The rally since April is also just the fifth time the index has gained more than +30% without a -3% pullback in between. (Source: Bespoke)

This Week in History

BLACK TUESDAY – October 29, 1929, became known as “Black Tuesday.”  The Dow Jones Industrial Average plunged more than 30 points to 230.07, an -11.7% collapse. At one point during the day the Dow was down -18.5%. (Source: The Wall Street Journal)

Economic Review

• Due to the current partial US government shutdown, the release of the following reports has been delayed or postponed: 
• Weekly Initial Jobless Claims and Continuing Claims (Department of Labor)
• September Durable & Capital Goods Orders (Conference Board)
• Q3 Advance Print Gross Domestic Product (Bureau of Economic Analysis) 
• September Personal Income and PCE (Bureau of Economic Analysis)
• Third Quarter Employment Cost Index (ECI) (Bureau of Labor Statistics) 
• The National Association of Realtors (NAR) reported that Pending Home Sales were flat in September after the prior month’s +4.2% rise (revised higher from +4.0%). That was below Wall Street expectations for a +1.2% increase. Year-over-year sales were up +1.5%, up from the prior month’s unrevised +0.5% annual. From a regional perspective, the Midwest fell -12.1 percentage points to -3.4%, the West was down -5.1 percentage points to -0.2%, the South slipped -2.1 percentage points to +1.1%, and the Northeast rose +4.2 percentage points to +3.1%. 
• According to the S&P Cotality Case-Shiller 20-City Home Price Index (HPI), U.S. housing prices increase +0.19% in August, an improvement from -0.09% in July (after being revised higher from -0.07%). That was better than expectations for a -0.10% dip. It broke five consecutive monthly declines, the longest slide since 2022 and second longest in 13 years, as lower mortgage rates brought some buyers back into the market. Of the 20 cities tracked by the index, 19 fell over the month, with Los Angeles being the weakest (-1.01%) while Chicago was the strongest-performing market (+0.26%). On a year-over-year (YoY) basis, the 20-city index was up +1.58%, beating expectations of +1.30% but down from a +1.82% annual increase the month before (revised lower from +1.82%). Nine of the 20 cities fell over the year, with Tampa being the weakest-performing market (-3.31%) while New York was the strongest (+6.10%).
• The competing Federal Housing Finance Agency (FHFA) HPI showed U.S. home prices improved +0.4% in August, up from 0.0% the prior month (revised higher from -0.1%). The results were better than Wall Street expectations for -0.4%. The government data showed home prices up +2.3% year-over-year, down from +2.4% the prior month. House prices were up in 8 of the 9 regions on an annual basis but mixed for the month-over-month comparison.
• The Chicago Purchasing Managers Index (PMI), a barometer for the Chicago region’s business and manufacturing conditions (also known as the Chicago Business Barometer), improved to 43.8 in October from an unrevised 40.6 the prior month. That was above Wall Street expectations for a 42.3 reading. Readings below the 50 level indicate contraction and it has been in contraction territory for 23 consecutive months now. The increase was robust, with all Business Activity subcomponents rising over the month, mainly driven by a rebound in New Orders, alongside decent rises in Production and Order Backlogs.
• The Richmond Fed Manufacturing Survey improved to -4 from an unrevised -17 the prior month. That was much better than expectations for an improvement to -12. All three component indexes improved, but only the Shipments index moved into expansion (positive) territory. The New Orders components rose +9 points to -6, and the Shipments component jumped +24 points to +4. The Employment index increased +5 points to -10.  After rising in recent months, both the Prices Paid and Prices Received indexes moderated in October. The Richmond Fed Service Sector Survey also improved, rising to -1 from an unrevised -7 the prior month.
• The Texas Manufacturing Outlook Survey improved in October, but was still negative, with the General Business Activity at -5.0, up from -8.7 the prior month and above the expected reading of -6.2. The Production index, a key measure of state manufacturing conditions, was unchanged at +5.2. New Orders were little changed at -1.7, up from -2.6, while Shipments slipped a bit to +5.8 from +6.7. Labor market measures mixed, with Employment up to +2.0 from -3.4, but Hours Worked fell to -5.5 from +3.4. Both Prices Paid and Prices Received declined for a second straight month, to +33.4 and +7.7. The Company Outlook index improved. Indicators of conditions Six Months Ahead mostly weakened but still are mostly positive. The Texas Service Sector Outlook Survey weakened for the month, falling to -9.4 from -5.6 the prior month (unrevised).
• Weekly MBA Mortgage Applications jumped +7.1% for the week ending October 24, after slipping -0.3% the prior week. The Purchase Index was up +4.5% after falling -5.2% the prior week. The Refinance Index rose +9.3% after gaining +4.0% the prior week. The average 30-Year Mortgage Rate dipped to 6.30% from 6.37% the prior week.

Asset Class Performance

Source: Bloomberg.
Asset‐class performance is presented by using market returns from an exchange‐traded fund (ETF) proxy that best represents its respective broad asset class. Returns shown are net of fund fees for and do not necessarily represent performance of specific mutual funds and/or exchange-traded funds recommended by The Retirement Planning Group. The performance of those funds may be substantially different from the performance of the broad asset classes and to proxy ETFs represented here. US Bonds (iShares Core US Aggregate Bond ETF); High‐Yield Bond (iShares iBoxx $ High Yield Corporate Bond ETF); Intl Bonds (Vanguard Total International Bond ETF); Large Growth (iShares Russell 1000 Growth ETF); Large Value (iShares Russell 1000 Value ETF); Mid Growth (iShares Russell Mid-Cap Growth ETF); Mid Value (iShares Russell Mid-Cap Value ETF); Small Growth (iShares Russell 2000 Growth ETF); Small Value (iShares Russell 2000 Value ETF); Intl Equity (iShares MSCI EAFE ETF); Emg Markets (iShares MSCI Emerging Markets ETF); and Real Estate (iShares US Real Estate ETF). The return displayed as “Allocation” is a weighted average of the ETF proxies shown as represented by 24% US Bonds, 10% International Bonds, 6% High Yield Bonds, 13.8% Large Growth, 13.8% Large Value, 3.6% Mid Growth, 3.6% Mid Value, 1.2% Small Growth, 1.2% Small Value, 16.8% International Stock, 4.2% Emerging Markets, 1.8% Real Estate.
* The term basis points (bps) refers to a common unit of measure for interest rates and other percentages in finance. One basis point is equal to 0.01%. Bond prices and bond yields are inversely related. As the price of a bond goes up, the yield decreases.