Weekly Market Update – October 24, 2025

Quick Takes

• Reduced trade tensions with China, more strong corporate earnings, and a cooler-than-expected inflation report pushed the S&P 500 Index and Nasdaq Composite to new record highs and left the small cap Russell 2000 Index just a quarter percent from its all-time high.
• The September Consumer Price Index (CPI) was nine days late, but worth the wait. Headline CPI and core CPI (CPI ex food and energy components) rose at a +3% annual pace—both slightly lower than the +3.1% rate Wall Street expected for each.
• The preliminary reading of the US Purchasing Managers’ Indexes (PMIs) from S&P Global showed that business activity strengthened in October. The composite PMI, which includes manufacturing and services, increased to 54.8 from 53.9 in September, marking the 33rd consecutive monthly reading above 50—the level that indicates economic expansion. 

Source: Bloomberg. Data as of October 24, 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.

Late, but Mild, Inflation Report Just What Markets Ordered

Markets got just what they ordered last week, a three-course meal of reduced trade tensions with China, more strong earnings, and finished with a cooler-than-expected inflation report. It was a satisfying combination that pushed the S&P 500 Index and Nasdaq Composite to new record highs and left the small cap Russell 2000 Index just a quarter percent from its all-time high. It was the best week for US stocks since early August, and, for those keeping count, it was S&P’s 34th record close of the year and the Nasdaq’s 33rd record close. For the week, the S&P was up +1.9%, the Nasdaq rose +2.3% and the Russell 2000 gained +2.5%. 

The September Consumer Price Index (CPI) was originally scheduled for October 15, but because of the partial government shutdown that went into effect on October 1, it was postponed like most other government agency releases. However, it was legally mandated to be released to calculate the 2026 Cost-Of-Living Adjustments (COLA) needed for Social Security payments and other social benefits and therefore was produced on Friday (October 24). The bottom line from the report was that both headline CPI and core CPI (CPI ex food and energy components) rose at a +3% annual pace—both slightly lower than the +3.1% rate Wall Street expected for each. The data reinforced expectations that the Federal Reserve would deliver another -25 basis point interest rate cut at its monetary policy committee meeting this Wednesday. It may be the last inflation data for a while, as the White House noted that the October CPI report likely won’t be released. For more details on the September CPI report, see The Chart of the Week feature below. 

Markets have been denied government macroeconomic data as the shutdown enters its fourth week, which has likely placed even more focus on the third quarter earnings season. About 29% of S&P 500 companies have reported Q3 earnings so far, and results have been strong. According to data from FactSet, 87% of companies have beat Wall Street analysts’ forecasts, compared to the 5-year average of 78% and 10-year average of 75%. And the magnitude of the earnings beats is also greater than the 5- and 10-year averages. Overall, year-over-year earnings growth for the S&P 500 is +9.2%, above the estimate of +7.9% on September 30. Beyond the robust earnings, on Thursday, a meeting between President Donald Trump and China’s Xi Jinping was confirmed. The two leaders will meet during President Trump’s upcoming visit to Asia, amid on-and-off-again trade tensions between the world’s two largest economies. Hopes are that the meeting will boost the odds that the countries establish a trade agreement that will reduce tariffs from their current levels.

Like the prior week, non-US stocks were more subdued than their US counterparts but still managed decent gains—even with the US Dollar Index rising +0.5%. The MSCI EAFE Index (developed market non-U.S. stocks) rose +1.2% after a +0.7% gain the prior week. The MSCI Emerging Markets Index increased +2.0% after dipping -0.3% the previous week.

US bonds continue to perform positively despite short- and long-term Treasury yields moving in opposite directions, albeit by marginal amounts.  The benchmark 10-year US Treasury yield ended the week down -1 basis point at 4.00% while the 2-year UST yield was up +2 basis points to 3.48%. The Bloomberg U.S. Aggregate Bond Index inched up +0.2% for the week following a +0.5% gain the prior week and marking a four-week winning streak. Non-US bonds slipped last week, with the Bloomberg Global Aggregate ex U.S. Bond Index returning -0.49%, which followed a +1.05% return the prior week.

Chart of the Week

The rate of inflation for consumer goods and services rose again in September, as the headline Consumer Price Index (CPI) was up +0.3% for the month, less than the +0.4% Wall Street expected, which is where it was in August (unrevised). Year-over-year (YoY), CPI was +3.0%, less than expectations for +3.1% and a tick up from the prior month’s unrevised +2.9%. Core CPI, which excludes the more volatile food and energy prices, increased +0.2% for the month, below expectations for +0.3%, which is where it was the prior month. YoY Core CPI was +3.0%, also below expectations and the prior month, which were both +3.1%. The energy index was up +1.5% month-over-month and up +2.8% year-over-year. The food index was up +0.2% month-over-month and up +3.1% year-over-year. Housing was a key reason that inflation was lower than expected in September, with the “owners’ equivalent rent” category rising just +0.1% for the month. The shelter index increased +0.2% month-over-month and was up +3.6% year-over-year. The CPI report was delayed nine days due to the government shutdown but was legally mandated to be released to calculate next year’s Cost-Of-Living Adjustments (COLA) to Social Security payments and other social benefits. Starting in January, the COLA increase will be +2.8% following this year’s +2.5% increase, which was the smallest in four years. The bottom line from the report is that CPI and Core CPI were both cooler than expected, which should keep the Federal Reserve ready to announce a -25-basis point rate cut at the conclusion of the FOMC policy meeting on October 29 and also should not hinder expectations for another cut in December.

Inflation Ticks Up but By Less Than Expected

US Consumer Price Index (CPI), Year-over-Year % Change

Source: Bureau of Labor Statistics, Briefing.com.

The Week Ahead

This week’s economic calendar is a little busier than last week’s sparse set of reports, but as the government shutdown rolled into the second longest on record last week, data will still be limited. Reports that are likely to be delayed this week, unless the government shutdown is resolved, include: Advance Report on Durable Goods, FHFA Home Price Index, weekly Unemployment Insurance Claims, Gross Domestic Product (Advance Print), Personal Income and Outlays, and the Employment Cost Index.

Investors will be focused on the widely anticipated -25 basis point interest rate cut at the conclusion of the Federal Open Market Committee (FOMC) meeting on Wednesday afternoon. Last week’s delayed September consumer inflation report on Friday came in softer than anticipated, reinforcing expectations for the Fed to cut. The Dallas and Richmond Fed districts will report their respective manufacturing surveys for October on Monday and Tuesday. Consumer Confidence is also due on Tuesday. Wednesday brings weekly MBA Mortgage Applications and Pending Home Sales before the Fed rate decision.  

With limited economic data coming, Wall Street will turn attention to a very busy week of earnings reports. Several of the Magnificent Seven will grab the spotlight, with five of its members scheduled to report results this week. Microsoft, Google-parent Alphabet, and Facebook-owner Meta report profits on Wednesday, followed by Apple and Amazon on Thursday. Other non-Mag7 notable reports will come from Keurig DrPepper, UnitedHealth, UPS, Caterpillar, Starbucks, Eli Lilly, Mastercard, Exxon Mobil, Colgate, and Visa. In all, 175 out of the S&P 500‘s 503 companies (about 18% of the index) are set to release third quarter earnings this week.

*Data subject to delay if government shutdown continues

Did You Know?

EARNINGS-DRIVEN BREAKOUT – 268 companies had reported third quarter earnings through last Thursday morning. When compared to periods of previous earnings seasons where similar numbers of companies had reported, this is a very strong season. The only period where the current 80.2% earnings beat rate (i.e., the earnings report was stronger than Wall Street analysts’ forecasts) was stronger was the rebound from COVID. (Source: Bespoke)

RECORD FLOWS – Through September, total inflows into US ETFs have surpassed $1 trillion, marking the fastest year-to-date (YTD) increase on record. Monthly inflows into ETFs have run at more than 3 times the usual seasonal average every month this year, and based on the current pace, total inflows for the year are expected to surpass $1.25 trillion. (Source: Bloomberg).

BEZOS OUT? – In an SEC filing on 10/14, Amazon.com founder and CEO, Jeff Bezos, disclosed holding 9% of Amazon.com’s outstanding shares, taking his ownership of the company below 10% for the first time ever. When Amazon.com first went public in 1997, Bezos owned more than 43% of the company’s outstanding shares. (Source: New York Post)

This Week in History

BARGAIN SHOPPING – On October 20, 1803, the US Senate approved a treaty with France to purchase the Louisiana Territory, doubling the size of the United States. The US paid $15 Million for the Louisiana Purchase, which amounted to 828,000 square miles of land including that from the following states today: Louisiana, Arkansas, Oklahoma, Kansas, Missouri, Iowa, Nebraska, Minnesota, North Dakota, South Dakota, Montana, Wyoming, Colorado, Texas, and New Mexico. That $15 million in 1803 would be roughly equivalent to $430 Million in 2025. (Source: WOLF Research)

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 Leading Economic Index (LEI) (Conference Board)
• September Chicago Fed National Activity Index (CFNAI) (Chicago Fed)
• September New Home Sales (Commerce Department)
• The preliminary “flash” S&P Global U.S. Composite Purchasing Managers Index (PMI) showed economic activity speed up in October, rising to 54.8 from 53.9 the month before. That was better than Wall Street expectations for 53.5. Results above 50 signal economic expansion. The Manufacturing PMI was nearly unchanged, inching up to 52.2 from 52.0 the prior month, which was in line with expectations. Manufacturers increased production to satisfy domestic demand, but they were also struggling with a growing backlog of unsold goods as exports waned. Meanwhile, the Services PMI rose to 55.2 from 54.2 the prior month. That was well ahead of expectations for a decline to 53.5. The service side of the economy — such as retailers, banks, and hospitals — employs most Americans and has driven the expansion since the pandemic. The service side of the economy reported “especially robust growth,” in October, S&P said. The S&P Global “flash” PMI surveys are among the first indicators of each month to give a sense of how well the U.S. economy is doing. “October’s flash PMI data point to sustained strong economic growth at the start of the fourth quarter,” said Chris Williamson, chief business economist of S&P Global.
• The final reading of the October University of Michigan Consumer Sentiment Index fell to 53.6 from the preliminary reading of 55.0 two weeks ago. It was expected to dip to 54.5. That is down from 55.1 the prior month. In the same period a year ago, the index stood at 70.5. The Current Economic Conditions component dropped to 58.6 from the preliminary reading of 61.0 and is down from 60.4 the prior month. The Consumer Expectations component fell to 50.3 from the initial estimate of 51.2 and from the prior month’s final reading of 51.7. One-year inflation expectations were unchanged from the preliminary reading of 4.6%, down from 4.7% the prior month. The five-year inflation expectations were  +3.9%, in line with the preliminary reading but up from +3.7% the prior month. The bottom line is that consumer sentiment remains under pressure, stuck near historical lows.
• The National Association of Realtors (NAR) reported that Existing Home Sales increased +1.5% in September to a seasonally adjusted annual rate of 4.06 million units, in line with expectations and up from the -0.2% decrease of 4.00 million units reported the prior month (unrevised). Year-over-year existing sales were up +4.1%, up from the +1.8% annual rate the prior month. The Median Existing Home Price increased +2.1% from the prior year to $415,200. The Inventory of Homes for Sale rose +1.3% from the prior month to 1.55 million units. Unsold Inventory sits at a 4.6-month supply, unchanged from the previous month. This still lags the 6.0-month supply typically associated with a more balanced market. Homes Listed for Sale remained on the market for 33 days on average, up from 31days the previous month and 28 days a year ago. First-Time Buyers were 30% of sales in the month, up from 28% the month before. Historically, these buyers make up closer to 40% of home sales, but affordability has been hit hard in the last two years due to fast-rising home prices and higher mortgage rates. All-Cash Sales rose to 30% of transactions from 28% the prior month. For the month, sales fell -2.1% in the Midwest, but rose +5.5% in the West, +2.1% in the Northeast and +1.6% in the South. 
• The Kansas City Fed Manufacturing Survey improved to +6 in October from +4 in September, which was well above expectations to come in at +2. The Production index surged to +15 from +4, while Shipments rose to +15 from +7, but New Orders slipped to +2 from +1. Employment weakened with the Number of Employees falling to +1 from +7 while the Average Employee Workweek fell to -3 from +3. The Prices Paid index ticked up to +41 from +40 while the Prices Received index rose to +19 from +13.
• Weekly MBA Mortgage Applications ticked down -0.3% for the week ending October 17, after falling -1.8% the prior week. The Purchase Index was down -5.2% after slipping -1.8% the prior week. The Refinance Index rose +4.0% after slipping -1.0% the prior week. The average 30-Year Mortgage Rate dipped to 6.37% from 6.42% 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.