October saw markets navigate a complex mix of political and economic developments as the Federal Reserve cut rates by 0.25% amid the second-longest government shutdown in US history. The data blackout caused by the shutdown forced policymakers to act without fresh economic indicators, with Chair Powell citing rising employment risks as the primary concern. Despite political gridlock and mixed economic signals, stocks closed the month near all-time highs after rebounding from early credit worries tied to regional banks and renewed US–China trade tensions. Encouraging progress at the late-October Trump–Xi summit and strong corporate earnings helped restore confidence. As investors look to year-end, sentiment remains cautiously optimistic—supported by the Fed’s easing stance, AI-driven growth enthusiasm, and resilient earnings—though elevated valuations, slowing job growth, and uncertainty over another rate cut keep expectations measured.

This week, markets were mixed as early strength gave way to caution following Fed commentary and tech earnings. Stocks initially rallied after last week’s better-than-expected inflation report, sending the S&P 500, Nasdaq, and Dow Jones to new highs. However, the strength faded after the Fed cut, with Chair Powell questioning a December cut. Mega-cap tech earnings also weighed on sentiment, as companies reported strong growth and forecasts for rising capital expenditures. Bonds traded lower, with longer-maturity bonds underperforming. Commodities were mixed: oil gave back recent gains, while gold stabilized after last week’s sell-off. 

This week, markets were volatile as credit concerns, trade tensions, and an unwind of speculative positions weighed on sentiment. The S&P 500 rebounded early after last week’s regional bank sell-off but lost momentum after the administration floated new software export controls and US–China tensions flared. Bonds edged higher as Treasury yields fell amid economic uncertainty, the government shutdown, and expectations for a rate cut next week. Commodities were volatile: gold and silver spiked early before reversing lower, while oil rebounded late after hovering near a 4.5-year low. The VIX eased after last week’s spike but remained elevated, reflecting caution across markets.

This week, markets declined as renewed US–China trade tensions and the government shutdown weighed on sentiment. The S&P 500 and the NASDAQ finished lower, giving back gains from earlier in the month, while small caps ended the week flat. Defensive sectors outperformed as market volatility increased, while financials led to the downside due to rising concern over commercial-loan exposures. Longer-maturity bonds outperformed, and high-yield corporate bonds underperformed investment grade. Gold surged to a new high, while crude oil fell over -6% to early 2021 levels.

Recent consumer survey data has revealed a widening gap between how consumers view the stock market and the economy. This month’s chart shows a dark blue line tracking the percentage of consumers who believe the stock market will rise over the next year, while the light blue line shows the University of Michigan’s Consumer Expectations Index, which measures outlooks for income, employment, and overall economic conditions. The takeaway: confidence in the stock market has rebounded, but overall sentiment remains weak.

This week, markets continued to grind higher, extending their early October rally as investor optimism held firm despite the ongoing government shutdown. The S&P 500 hit another record high but mostly traded sideways, led by the Utilities and Technology sectors, which continue to benefit from AI investment. In the credit market, bonds traded lower as Treasury yields increased with the government shutdown. Meanwhile, gold and bitcoin set record highs, and the VIX drifted up toward a 3-month high but remained range-bound, signaling expectations for market volatility to remain subdued.

This week, the markets ended higher, extending September’s momentum despite lingering macro uncertainties. The S&P 500 rose nearly +2% to another all-time high, led by health care, technology, and utilities gains, while energy and financials lagged. International equities outpaced U.S. markets as the dollar softened, with emerging markets ahead of developed. Treasuries rallied on weaker fixed-income labor data, with longer maturities outperforming as interest rates fell. Corporate bonds also trade higher, with investment-grade outperforming high yield. Commodities diverged as crude oil fell to its lowest since early May, while gold extended its record-setting rally.

This week, markets posted modest gains with a slight risk-on tone. The S&P 500 edged higher, led by Technology, Growth, and High Beta, while defensives such as Health Care, Consumer Staples, and Low Volatility lagged. International returns were mixed as the US dollar traded sideways. The Treasury curve steepened after the Fed cut rates in fixed income, pushing the back end higher. Longer-duration bonds underperformed short- and intermediate-duration bonds, and high-yield outperformed investment-grade. Oil gained +2%, while gold finished unchanged.

Corporate credit spreads are at levels not seen in decades. Investment-grade credit spreads, which measure how much more a top-rated company pays to borrow compared to the U.S. government, have fallen to 0.77%, a level last seen in 1998. Today’s credit spreads stand out for how tight they are compared to history, with companies paying a significantly smaller risk premium to borrow.

This week, Markets traded higher with gains across equities and bonds. The S&P 500 advanced alongside the Russell 2000 and NASDAQ, with factor leadership favoring Momentum and High Beta over Low Volatility and Value. International equities outperformed the S&P with emerging leading developed as the USD weakened. Treasury yields declined across the curve, most notably on the long end, causing long-duration Treasuries to outperform. Within corporate credit, IG outperformed HY as credit spreads held steady. Oil traded lower, while gold hit a record high. The VIX was flat, and bond market volatility declined after the August jobs and inflation reports increased the probability of a rate cut next week.

The Federal Reserve has kept interest rates unchanged this year due to concerns that tariffs could reignite inflation. This concern, strong job growth, and low unemployment gave the central bank time to wait for more data. However, the Fed’s policy stance was tested in early August when the July jobs report showed U.S. employers added fewer jobs than expected and unemployment rose to 4.2%. The report suggested that high borrowing costs are weighing on the economy and that the focus should be shifted from inflation risk to slowing economic growth.

This week, the markets rose broadly with small caps and cyclical sectors leading. The S&P 500 and Nasdaq returned ~+2% but underperformed the Russell 2000’s +4%, signaling a continued rotation into smaller companies. Growth outperformed Value, and High Beta led, while Low Volatility and Equal Weight lagged. International equities underperformed despite the U.S. dollar weakening. Treasury yields fell, boosting mid- and long-duration bonds. High-yield corporate outperformed investment grades as credit spreads tightened. Gold moved back toward record highs, oil edged higher, and the U.S. dollar weakened. Volatility declined, with the VIX and MOVE indices finishing lower.