In Brief
- Major US stock indices (S&P 500, Dow Jones, Nasdaq 100) experienced a downturn, influenced by weaker-than-expected tech earnings.
- Futures for the S&P 500 and Nasdaq 100 also showed declines, reflecting the morning’s trading sentiment.
- Corporate earnings reports presented a mixed picture, with Netflix and Texas Instruments weighing on the market, while Intuitive Surgical and Capital One Financial offered positive results.
- Market focus remains on US-China trade talks and the ongoing US government shutdown, which continues to impact economic data releases and market sentiment.
- The anticipation of further interest rate cuts from the Federal Reserve persists, with a high probability priced in for the upcoming FOMC meeting.
Market Performance and Key Movers
US stock markets faced downward pressure today, with significant drops observed across major indices. The S&P 500 Index declined by 0.37%, the Dow Jones Industrials Index fell by 0.36%, and the Nasdaq 100 Index saw a more substantial drop of 0.68%. This overall negative sentiment was mirrored in futures trading, with December E-mini S&P futures down 0.37% and December E-mini Nasdaq futures down 0.70%.
Corporate Earnings Stirring Market Sentiment
Several influential companies reported earnings today, contributing to the mixed market performance. Chipmakers were particularly affected after Texas Instruments projected fourth-quarter revenue below analyst expectations, leading to a decline in its stock. Netflix also experienced a significant drop of over 9% following the release of third-quarter Earnings Per Share (EPS) that missed expectations. Conversely, some companies reported positive results: Intuitive Surgical surged more than 16% after raising its full-year Da Vinci procedure growth forecast, and Capital One Financial rose over 3% on better-than-expected third-quarter adjusted EPS.
Economic Data and Federal Reserve Outlook
Economic indicators provided further context for market movements. US MBA mortgage applications decreased by 0.3% for the week ended October 17, with purchase applications down 5.2%, though refinancing applications saw a 4.0% increase. The average rate for a 30-year fixed mortgage dipped to 6.37%. The markets are keenly watching the potential for a -25 basis point rate cut at the upcoming Federal Open Market Committee (FOMC) meeting on October 28-29, with a 97% probability priced in.
Geopolitical and Domestic Headwinds
International trade relations and domestic political issues continue to influence market sentiment. All eyes are on the progress of US-China trade talks, especially after President Trump’s reiterated threat to increase tariffs on Chinese goods if a deal isn’t reached by November 1. The ongoing US government shutdown, now in its fourth week, is impacting key economic data releases, including unemployment claims and the September payroll report. Estimates suggest a prolonged shutdown could lead to widespread employee furloughs and a rise in the unemployment rate.
Mixed Corporate Earnings Season
The third-quarter earnings season remains a key focus for investors. While a high percentage of S&P 500 companies are beating earnings forecasts—on track for the best quarter since 2021—the overall profit growth for Q3 is anticipated to be the smallest in two years at +7.2% year-over-year. Sales growth is also projected to slow slightly. Despite this, a greater number of companies providing guidance are expected to surpass analyst expectations, a promising sign for the market.
International Markets Show Weakness
Global markets mirrored the cautious sentiment seen in the US. The Euro Stoxx 50 declined by 0.43%. In Asia, China’s Shanghai Composite closed down 0.07%, and Japan’s Nikkei Stock 225 experienced a slight dip of 0.02%.
Interest Rate Landscape
US Treasury Markets
December 10-year T-notes saw a slight decline of 3 ticks, pushing the 10-year T-note yield up by 1.0 basis point to 3.972%. Supply pressures from an upcoming auction of $13 billion in 20-year T-bonds are weighing on the market. However, the impact of the ongoing US government shutdown provided some support, as potential job losses and reduced consumer spending could encourage further Fed rate cuts.
European Bond Markets
European government bond yields presented a mixed picture. The 10-year German bund yield rose by 1.6 basis points to 2.568%. In contrast, the 10-year UK gilt yield dropped to a 6.5-month low, settling down 5.5 basis points at 4.422%.
European Inflation and Monetary Policy
UK inflation figures for September showed the Consumer Price Index (CPI) remaining unchanged year-over-year at 3.8%, below the expected 4.0%. Core CPI unexpectedly eased to 3.5% from 3.6%, also falling short of forecasts. The European Central Bank (ECB) signaled a steady stance, with Vice President Guindos stating that current interest rates are adequate and the inflation outlook is positive. Swaps indicate only a 2% chance of an ECB rate cut at the upcoming policy meeting on October 30.
Notable US Stock Movements
Losers in Focus
Netflix (NFLX) led the decliners in the S&P 500 and Nasdaq 100, falling over 9% after its Q3 EPS of $5.87 missed the consensus estimate of $6.94.
Texas Instruments (TXN) dropped more than 5% and dragged down other chipmakers. The company’s Q4 revenue forecast midpoint was below consensus. Consequently, semiconductor stocks like Microchip Technology (MCHP), Lam Research (LRCX), Advanced Micro Devices (AMD), and Intel (INTC) fell over 3%. Analog Devices (ADI), Marvell Technology (MRVL), KLA Corp (KLAC), ARM Holdings Plc (ARM), and ON Semiconductor (ON) also saw declines of over 2%.
Cryptocurrency-related stocks tumbled as Bitcoin prices fell over 2%. Coinbase Global (COIN), Galaxy Digital (GLXY), MARA Holdings (MARA), Riot Platforms (RIOT), and MicroStrategy (MSTR) each dropped more than 3%.
AST SpaceMobile (ASTS) declined by over 12% following the announcement of a private offering for $850 million in convertible senior notes.
GE Vernova (GEV) fell more than 8% after reporting Q3 EPS of $1.64, below the consensus of $1.86.
Manhattan Associates (MANH) was down over 5% as its Q3 remaining performance obligations of $2.077 billion were slightly below the consensus of $2.088 billion.
Mattel (MAT) slid over 2% after its Q3 net sales of $1.74 billion fell short of the $1.84 billion consensus.
Commercial Metals (CMC) decreased by more than 2% after Jeffries downgraded the stock to hold from buy.
Gainers Making Headlines
Intuitive Surgical (ISRG) was the top performer in the S&P 500 and Nasdaq 100, climbing more than 16% after increasing its full-year worldwide Da Vinci procedure growth forecast.
Pegasystems (PEGA) surged over 10% on Q3 revenue of $381.4 million, significantly exceeding the consensus of $351.8 million.
Hilton Worldwide Holdings (HLT) rose more than 4% after raising its full-year adjusted EBITDA guidance.
Capital One Financial (COF) gained over 3% after reporting Q3 adjusted EPS of $5.95, substantially beating the $4.39 consensus.
Avadel Pharmaceuticals (AVDL) was up more than 3% on news that Alkermes has agreed to acquire the company for approximately $2.1 billion.
Alphabet (GOOGL) saw a rise of over 1% amid reports that Anthropic PBC is in talks with Google for a significant cloud computing services deal.
Amphenol (APH) increased by more than 1% after reporting Q3 EBITDA of $1.93 billion, comfortably above the $1.64 billion consensus.
Upcoming Earnings Reports (October 22, 2025)
- Alcoa Corp (AA)
- Amphenol Corp (APH)
- Annaly Capital Management Inc (NLY)
- AT&T Inc (T)
- Avery Dennison Corp (AVY)
- Boston Scientific Corp (BSX)
- CACI International Inc (CACI)
- Churchill Downs Inc (CHDN)
- CME Group Inc (CME)
- Crown Castle Inc (CCI)
- Equity LifeStyle Properties In (ELS)
- First American Financial Corp (FAF)
- FirstEnergy Corp (FE)
- GE Vernova Inc (GEV)
- Globe Life Inc (GL)
- Graco Inc (GGG)
- Hexcel Corp (HXL)
- Hilton Worldwide Holdings Inc (HLT)
- International Business Machines (IBM)
- Kinder Morgan Inc (KMI)
- Knight-Swift Transportation Holdings Inc (KNX)
- Lam Research Corp (LRCX)
- Las Vegas Sands Corp (LVS)
- Lennox International Inc (LII)
- Lithia Motors Inc (LAD)
- Medpace Holdings Inc (MEDP)
- Molina Healthcare Inc (MOH)
- Moody’s Corp (MCO)
- Northern Trust Corp (NTRS)
- NVR Inc (NVR)
- O’Reilly Automotive Inc (ORLY)
- Packaging Corp of America (PKG)
- QuantumScape Corp (QS)
- Raymond James Financial Inc (RJF)
- Reliance Inc (RS)
- Robert Half Inc (RHI)
- SEI Investments Co (SEIC)
- Sonoco Products Co (SON)
- Southern Copper Corp (SCCO)
- Southstate Bank Corp (SSB)
- Southwest Airlines Co (LUV)
- Stifel Financial Corp (SF)
- Teledyne Technologies Inc (TDY)
- Tesla Inc (TSLA)
- Thermo Fisher Scientific Inc (TMO)
- Travel + Leisure Co (TNL)
- United Rentals Inc (URI)
- Vertiv Holdings Co (VRT)
- Viking Therapeutics Inc (VKTX)
- Westinghouse Air Brake Technologies (WAB)
- Wyndham Hotels & Resorts Inc (WH)
Final Thoughts
Market participants are navigating a landscape shaped by corporate earnings, geopolitical tensions, and domestic policy challenges. While some sectors faced headwinds from disappointing results, the overall earnings season shows resilience, and anticipation of Fed rate adjustments continues to influence investor sentiment.