Key Takeaways
- Major US stock indexes (S&P 500, Dow Jones, Nasdaq 100) traded higher, influenced by a slightly weaker-than-expected US CPI report.
- Positive manufacturing and services PMI data also supported stock gains, though consumer sentiment dipped.
- Geopolitical and domestic concerns, including trade negotiations with Canada and China, along with the ongoing US government shutdown, continue to impact market sentiment.
- Q3 earnings season shows a high percentage of S&P 500 companies beating forecasts, but overall profit and sales growth are expected to slow.
- Interest rates saw a slight rebound in T-notes as markets anticipate a Federal Reserve rate cut, while European bond yields moved higher.
Market Overview
Major US stock market indexes experienced an uptick today, with the S&P 500 Index ($SPX) gaining +0.76%, the Dow Jones Industrials Index ($DOWI) rising +0.85%, and the Nasdaq 100 Index ($IUXX) advancing +1.04%. December E-mini S&P futures (ESZ25) were up +0.70%, and December E-mini Nasdaq futures (NQZ25) increased by +0.82%.
💡 The positive market movement followed the release of a US CPI report that was slightly below expectations, potentially providing the Federal Reserve with more flexibility for interest rate reductions. The September CPI report indicated a +0.3% month-over-month and +3.0% year-over-year increase, falling short of the anticipated +0.4% m/m and +3.1% y/y. Similarly, the core CPI for September showed +0.3% m/m and +3.1% y/y, also below market forecasts of +0.2% m/m and +3.1% y/y.
📌 While the immediate market reaction to the CPI data was favorable, the year-over-year CPI figure of +3.0% matched a 16-month high, and the core CPI at +3.0% y/y remains significantly above the Federal Reserve’s target of +2.0%.
📊 The stock market also found support from robust economic indicators. The S&P US manufacturing PMI for October rose by +0.2 to 52.2, exceeding the expected unchanged figure of 52.0. The S&P US services PMI for the same month increased by +1.0 to 55.2, surpassing forecasts of a -0.7 point decline to 53.5.
⚡ Conversely, this positive sentiment was tempered by a decline in the final October University of Michigan US consumer sentiment index, which fell -1.4 points to 53.6, underperforming the expected decrease of -0.5 points to 54.5.
Trade and Geopolitical Factors
The market environment experienced a downturn following President [President’s Name]’s announcement late Thursday to terminate trade negotiations with Canada. This decision was reportedly triggered by an anti-tariff advertisement released by the provincial government of Ontario, which featured former US President Reagan speaking in favor of free trade and against tariffs in a 1987 address. The advertisement characterized tariffs as an outdated concept that stifles innovation, increases prices, and negatively impacts American workers.
📍 President [President’s Name] characterized the advertisement as deceptive, suggesting it was an attempt to influence the US Supreme Court ahead of oral arguments scheduled for November 5. These arguments concern the legality of President [President’s Name]’s reciprocal tariffs. It’s noteworthy that lower courts have previously ruled these tariffs to be illegal, based on a dubious claim of emergency authority. Should the Supreme Court uphold these rulings, the US government would be obligated to refund collected tariffs, and President [President’s Name]’s authority to impose tariffs would be confined to specific sections of existing US trade law.
📈 Market attention remains fixed on US-China trade discussions, particularly as President [President’s Name] reiterated his threat to increase tariffs on Chinese goods if there isn’t a deal by November 1. A key event on the horizon is the scheduled meeting between President [President’s Name] and Chinese President Xi Jinping next Thursday, on the sidelines of the Asia-Pacific Economic Cooperation conference in South Korea.
Domestic Concerns and Earnings Season
The ongoing US government shutdown, now in its fourth week, continues to exert pressure on market sentiment and has led to the delay of crucial economic reports. This shutdown is postponing the release of data such as weekly initial unemployment claims for the past four weeks and the September payroll report. Bloomberg Economics estimates that approximately 640,000 federal workers are being furloughed, which could lead to an increase in jobless claims and potentially raise the unemployment rate to 4.7%.
📈 The capital markets are also closely watching the progression of the Q3 earnings season. Positive corporate earnings are providing a supportive backdrop for stocks; reports indicate that 85% of S&P 500 companies that have reported thus far have surpassed forecasts, positioning this quarter for the strongest performance since 2021. However, Q3 profits are projected to have grown by +7.2% year-over-year, marking the smallest increase in two years. Furthermore, Q3 sales growth is expected to decelerate to +5.9% y/y, down from +6.4% in Q2.
International Markets and Interest Rates
Overseas stock markets presented a mixed performance on Friday. The Euro Stoxx 50 index saw a slight decrease of -0.06%. In Asia, China’s Shanghai Composite closed higher, gaining +0.71%, while Japan’s Nikkei Stock 225 recorded a notable increase of +1.35%.
Interest Rates and Monetary Policy
December 10-year T-notes (ZNZ5) experienced a modest gain of +1 tick, resulting in a -0.8 basis point decrease in the 10-year T-note yield to 3.993%. T-notes recovered from earlier declines following the slightly softer-than-expected US CPI report. Additionally, the 10-year breakeven inflation expectations rate decreased by -0.9 basis points to 2.294%.
📍 T-notes are receiving ongoing support from the protracted US government shutdown, which poses risks of increased job losses, reduced consumer spending, and a weakened US economy. This scenario could potentially prompt the Federal Reserve to continue with interest rate cuts.
📊 The markets are currently factoring in a 97% probability of a -25 basis point rate cut at the upcoming FOMC meeting scheduled for October 28-29.
📈 European government bond yields increased, with the 10-year German bund yield rising by +4.5 basis points to 2.627%, and the 10-year UK gilt yield climbing by +0.4 basis points to 4.427%.
💡 Swaps are indicating a 1% chance of a -25 basis point rate cut by the European Central Bank (ECB) at its next policy meeting on October 30.
US Stock Movers
The Magnificent Seven stocks demonstrated mixed performance today. Alphabet (GOOG) stood out with a +2.8% gain, while Nvidia (NVDA), Apple (AAPL), and Amazon (AMZN) each saw gains exceeding 1%. Tesla (TSLA) experienced a notable decline of -2%, and Meta Platforms (META) registered a slight decrease.
Semiconductor Sector Strength
The semiconductor industry was broadly higher, contributing to the gains in technology stocks and the overall market. Advanced Micro Devices (AMD) surged over +6%, and Micron Technology (MU) rose more than 4%. Other significant gainers included Broadcom (AVGO), Arm Holdings (ARM), and Lam Research (LRCX), each up more than +3%. Intel (INTC) posted a +0.6% increase following a positive earnings report and strong revenue guidance.
Cryptocurrency Stocks Surge
Cryptocurrency-related stocks experienced a positive trend today, mirroring the gains in digital currencies, with Bitcoin up +0.9% and Ethereum up +2.3%. Coinbase (COIN) saw a significant increase of over +7% after JPMorgan upgraded the stock to overweight from neutral, citing reduced risk and growing monetization opportunities. Riot Platforms (RIOT) climbed more than +5%, and MARA Holdings (MARA) rose more than +3%.
Individual Stock Performance
Ford (F) registered a gain of over +11% after exceeding analyst earnings expectations and expressing optimism about recovery from a fire at a key supplier’s facility.
Newmont (NEM) declined by more than -4% after the company projected that its gold production in 2026 might not exceed 2025 levels.
Deckers Outdoor (DECK) dropped more than -12% following the announcement of disappointing net sales projections for 2026.
Upcoming Earnings Reports (10/24/2025)
- Booz Allen Hamilton Holding Co (BAH)
- First Hawaiian Inc (FHB)
- General Dynamics Corp (GD)
- Gentex Corp (GNTX)
- HCA Healthcare Inc (HCA)
- Illinois Tool Works Inc (ITW)
- Procter & Gamble Co/The (PG)
Expert Summary
Today’s market performance was influenced by a CPI report that offered a slightly more favorable outlook for potential Fed rate cuts. While manufacturing and services data showed strength, consumer sentiment dipped, and geopolitical trade tensions continued to be a focal point. The ongoing earnings season presents a mixed picture of strong beats but slowing overall growth.