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Week in Review
Equity Markets:
US stock markets rebounded last week following an easing of tariff tensions between the United States and China. However, volatility was marked, compounded by the third week of the federal government shutdown, the start of earnings season, and fears over losses on regional banks related to subprime auto loans.[1]
The S&P 500 gained 1.71% last week while the Dow Jones Industrial Average rose 1.56% and the Nasdaq gained 2.14%.[2] This quarter’s earnings season began with robust earnings announced by the major US banks. More companies are set to announce this week across sectors and industries.
Fixed Income Markets:
US Treasurys generated positive gains last week as yields came down broadly last week. Notably, the yield on 10-year Treasurys fell below 4% during the week, their lowest level since October 2024, before rising back to that level on Friday. Investment-grade corporate bonds outperformed Treasurys last week, and there was robust investor demand for Municipal bonds.[3]
Economic Updates:
Fed Chair Jerome Powell furthered notions that the Federal Open Market Committee continues to anticipate cutting interest rates when it meets later this month. This is despite inflation remaining elevated. Chair Powell indicated potential economic risks resulting from weakness in the employment market.
The Fed released their ‘Beige Book’ report this past week, which noted economic conditions remained relatively stable despite elevated inflation and increased corporate layoffs. Noteworthy is that the ‘Beige Book’ report reflects only pre-government shutdown economic conditions, missing October and the impact the shutdown has had during this time.[4]
Looking Ahead
Equity Markets:
Stock markets are focused on the new earnings season. So far, 12% of companies in the S&P 500 have reported, with 86% having reported positive EPS surprises. However, the magnitude of those earnings surprises has been lower than recent averages. The 12-month Price/Earnings ratio for the S&P 500 is 22.4, down from its recent 22.8 but still well above both its 5-year average of 19.9 and its 10-year average of 18.6. The anticipated growth rate for the Index this quarter is 8.5%; should that hold, it would mark the Index’s ninth consecutive quarter of year/year earnings growth.[5]
Fixed Income Market
The stability of bonds has furthered their attractiveness amidst a swath of volatilities, including geopolitical risks; elevated inflation; labor market weaknesses; and tariff instabilities, especially regarding our relationship with China. Higher demand has seen prices rise while yields have come down. Despite the higher prices, bonds generally remain at welcoming entry points for investors seeking income generation and relative security, although risk premiums may widen over time.[6]
Economic Updates:
The Consumer Price Index will be announced later this week. This important metric for inflation comes despite the continuing federal government shutdown, as the Bureau of Labor Statistics was called back to work to complete this metric. Last September’s CPI showed US annual inflation had risen to 2.9%, up from 2.7% in August.[7]
Sources:
1) Seeking Alpha
https://seekingalpha.com/article/4830958-what-moved-markets-this-week
2) JP Morgan Asset Management
3) T. Rowe Price Investment Services, Inc.
https://www.troweprice.com/personal-investing/resources/insights/global-markets-weekly-update.html
4) LPL Financial
https://www.lpl.com/research/blog/weekly-market-performance-october-17-2025.html
5) FactSet Research, Inc.
6) Nuveen, LLC
7) John Hancock Investment Management, LLC
https://www.jhinvestments.com/weekly-market-recap#fund-industry-overview
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