AE Wealth Management: Weekly Market Insights | 10/19/25 – 10/25/25
Weekly Market Commentary
THE WEEK IN REVIEW: Oct. 19-25, 2025
Government remains shut, earnings keep markets motoring
There doesn’t appear to be any end in sight for the government shutdown yet. Some people had hoped to see a softening of rigid positions and movement toward a deal for reopening the government after the “No Kings” rally. That doesn’t seem to be the case so far.
The shutdown hasn’t impacted the markets in a meaningful way, although a mini banking scare and President Donald Trump’s back-and-forth on tariffs with China impacted markets for a short term.1,2 We also saw volatility return, but outside of not getting timely (and possibly accurate) data, the shutdown appears to be a non-factor for markets and the economy to this point.3
The Dow hit a new record last week and closed at about 47,000 for the first time.4 The S&P 500 and Nasdaq also set new records, with the S&P breaking over the 6,800 mark for a while before settling in just below it on Friday.5.6
Market performance was driven mostly by a healthy earnings season and the expectation for two more rate cuts by year-end (more below), after glum predictions that a weakened and overleveraged consumer, tariff-based inflation and higher interest rates would tank third-quarter earnings. The opposite has occurred instead; earnings have been surprisingly strong, and the fact that earnings have grown more than 9% on top of already strong levels bodes well.7
Markets have plowed through some immense headwinds this year. If you were counting on the news to give you a sense of where we are, you would be thinking we’ve had a miserable year. But despite all the gut-twisting ups and downs, we’re up over 15% on the S&P 500, almost 11% on the Dow and over 20% on the Nasdaq year to date — which speaks to the resiliency of the markets.
The government should probably be thinking about its own resiliency and consider the fact that the longer it stays shut, the more people will question exactly what it is they’re missing. It may be harder to go back to a government that looks like it did before the shutdown.
Inflation still static
The latest Consumer Price Index (CPI) reading, which was delayed by the shutdown, came in at 3.0% last week.8 Although inflation inched up from the prior reading of 2.9%, it wasn’t as high as most experts expected.
Prior to the report, there was some concern about Trump’s midnight announcement that he was breaking off trade negotiations with Canada because Ontario was running an anti-tariff ad with footage of former President Reagan speaking against tariffs.9 But markets simply shrugged off the announcement as another one of the president’s tariff spasms, and Ontario promised to stop running the ad after the first weekend of the World Series.
The CPI reading pretty much closed the deal on the Federal Reserve lowering rates at its two remaining meetings this year. That will be three rate cuts this year, which is pretty much what the market was banking on.
Coming this week
- The Fed is scheduled to meet on Tuesday and Wednesday, and markets are expecting another rate cut of 25 basis points (0.25%). Expectations for another 25-basis-point cut in December are running at a 91% probability rate.10
- Third-quarter earnings continue to roll in.11 So far, 29% of S&P 500 companies have reported results, with 87% reporting positive earnings per share (EPS) and 83% reporting positive revenue. This is in line with and even slightly above last quarter, although earnings growth for the third quarter is slightly below last quarter at 9.2%.
- This week’s data will kick off on Tuesday with the S&P Case-Shiller home price index and consumer confidence.
- On Wednesday, we’ll get the Fed’s rate decision and Fed Chair Jerome Powell’s post-meeting press conference. We’ll also see pending home sales and MBA mortgage applications.
- Thursday will feature the initial third-quarter gross domestic product (GDP) reading. Right now, the Atlanta Fed GDPNow™ is estimating GDP grew by 3.9% in Q3.12 If that’s accurate, it would be fantastic.
- Finally, on Friday, we’ll see personal income and spending with the Personal Consumption Expenditures (PCE) report. PCE has been described as the Fed’s preferred measure of inflation because it is viewed as a more encompassing measure of inflation and includes a broader range of consumer expenditures, while the CPI focuses on out-of-pocket costs for urban households.
- The big caveat is that if the government remains shut, most of the data we receive will not be provided or will be incomplete. The other concern around data is if the government reopens, how accurate will the flood of data be, and how will markets handle it? The potential is there for a really big week in the markets with lots of activity going on.
Index Performance Returns % | |||||
| 1 WK | YTD | 1YR | 3YRS | 5YRS | |
| S&P 500 | 1.92% | 15.47% | 16.90% | 21.39% | 14.41% |
| NASDAQ | 2.31% | 20.17% | 26.01% | 28.44% | 14.98% |
| DJIA | 2.20% | 10.96% | 11.04% | 14.44% | 10.75% |
Interest Rates: | |||||
| 10/24/2025 | 10/17/2025 | ||||
| UST 10 YR Government Bond Yield | 4.00% | 4.01% | |||
| Germany 10 YR | 2.63% | 2.58% | |||
| Japan 10 YR | 1.66% | 1.63% | |||
| 30 YR Mortgage | 6.19% | 6.29% | |||
| Oil | $61.42/ppb | $57.60/ppb | |||
| Regular Gas | $3.06/ppg | $3.04/ppg | |||
| All data as of Oct. 24, 2025 | |||||
Sources:
1 Ben King. BBC. Oct. 17, 2025. “Fears over US banks cause stock market jitters.” https://www.bbc.com/news/articles/c4gjz82wx4wo. Accessed Oct. 25, 2025.
2 Rozanna Latiff and David Lawder. Reuters. Oct. 24, 2025. “US, Chinese officials face off on export controls, Trump tariff threat in Malaysia.” https://www.reuters.com/world/china/us-chinese-officials-face-off-export-controls-trump-tariff-threat-malaysia-2025-10-24/. Accessed Oct. 25, 2025.
3 Yahoo! Finance. “CBOE Volatility Index (ˆVIX).” https://finance.yahoo.com/quote/%5EVIX/. Accessed Oct. 25, 2025.
4 Yahoo! Finance. “Dow Jones Industrial Average (ˆDJI).” https://finance.yahoo.com/quote/%5EDJI/. Accessed Oct. 25, 2025.
5 Yahoo! Finance. “S&P 500 (ˆGSPC).” https://finance.yahoo.com/quote/%5EGSPC/. Accessed Oct. 25, 2025.
6 Yahoo! Finance. “NASDAQ Composite (ˆIXIC).” https://finance.yahoo.com/quote/%5EIXIC/. Accessed Oct. 25, 2025.
7 John Butters. FactSet. Oct. 24, 2025. “Earnings Insight.” https://advantage.factset.com/hubfs/Website/Resources%20Section/Research%20Desk/Earnings%20Insight/EarningsInsight_102425.pdf. Accessed Oct. 25, 2025.
8 U.S. Bureau of Labor Statistics. Oct. 24, 2025. “Consumer Price Index Summary.” https://www.bls.gov/news.release/cpi.nr0.htm. Accessed Oct. 25, 2025.
9 Paul Wiseman. AP. Oct. 24, 2025. “Trump says a Canadian ad misstated Ronald Reagan’s views on tariffs. Here are the facts and context.” https://apnews.com/article/trump-canada-ad-tariff-reagan-trade-talks-f711559b0084b377d82d964893c67c78. Accessed Oct. 25, 2025.
10 CME Group. “FedWatch.” https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html. Accessed Oct. 25, 2025.
11 John Butters. FactSet. Oct. 24, 2025. “Earnings Insight.” https://advantage.factset.com/hubfs/Website/Resources%20Section/Research%20Desk/Earnings%20Insight/EarningsInsight_102425.pdf. Accessed Oct. 25, 2025.
12 Federal Reserve Bank of Atlanta. “GDPNow™.” https://www.atlantafed.org/cqer/research/gdpnow. Accessed Oct. 25, 2025.
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