November 3, 2025

No price is too low for a bear or too high for a bull.

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Happy post Halloween, the markets did not deliver a trick but a big treat. Here are the numbers. The S&P 500 ended the week flat off .08%, the Dow Jones Industrial Average gained .32%, the Nasdaq delivered up,80%. Internationally, The FTSE 100 added .74% and the MSCI-EAFE was also flat off.06%. The 2-year Treasury paid 3.58% and the 10-year yield finished at 4.01%.

Another month ends, and it was generally a positive one for investors. Most stock and bond asset classes advanced in October, but there were some divergent returns across the market cap structure and among various factors (growth/value/quality, etc.). Both REITS and high-yield bonds dipped in October as hints of credit stress started to emerge.

There were two big events that focused attention coming into last week – the trade meeting in South Korea and the Fed’s decision on interest rates. The outcome of the trade meeting can maybe best be described as a ‘pause in hostilities.’ Both sides took a step back from the tit-for-tat approach to setting trade restrictions and tariffs, but few analysts think the detente will last for a particularly long time. It’s basically more of the same. It’s telling that investors hardly reacted to the meeting – we’ve all probably become a bit numb to the ebbing and flowing in the trade news.

The Fed meeting went off largely as expected as well, but there were a few interesting wrinkles. Overall, U.S. equities finished October on a strong note, with the S&P 500® up 2%, thanks to blockbuster earnings from Big Tech on the final trading days of the month. Optimism surrounding a potential trade deal between the U.S. and China and anticipation of the Fed’s recent rate cut propelled risk-on sentiment through the month, although Fed Chair Powell’s recent hawkish remarks spooked markets.

Gains were powered by mega-cap strength, with the S&P 500 Top 50 up 4%. Meanwhile, smaller-caps had a challenging time, with the S&P MidCap 400® and S&P SmallCap 600® down 0.5% and 1% respectively. Information Technology led among sectors while Financials and Materials lagged.

Speaking of tech, U.S. markets climbed on renewed AI enthusiasm, with the S&P 500 buoyed by chip names after NVIDIA announced plans to supply hundreds of thousands of GPUs to South Korean firms and the government. Heavy trading in technology names helped lift the Nasdaq, even as a breakdown in talks between Disney and YouTube TV—removing ABC, ESPN and other channels from the platform—pressured media and distribution stocks. Earnings drove sector rotation: Exxon Mobil topped estimates with adjusted Q3 EPS of $1.88, helped by stronger production in Guyana and the Permian, lifting energy shares. Legacy automakers also surprised investors, with Ford and GM posting results that sent their stocks higher and stoked debate over whether the industry is staging a sustainable rebound. Under the surface, domestic and geopolitical headwinds persist. U.S. home turnover is at multi-decade lows, underscoring a sluggish housing market, while Israel’s delay on a major gas deal and new sanctions on Russian oil add uncertainty to energy markets as crude prices nudged up. A large FDA drug recall highlights ongoing sector-specific risks for healthcare.

On the Interest rate front, last week’s meeting, held without the normal government data due to the shutdown, gave some interesting remarks. The Fed called an end to quantitative tightening on December 1. This wasn’t a foregone conclusion going into Wednesday, but there were certainly rumors circulating that it might happen. More surprising was Chairman Powell’s comments in the press conference. He noted that this week’s rate cut might not be followed by another one on December 10, when the FOMC votes on monetary policy again. “In the committee’s discussions at this meeting, there were strongly differing views about how to proceed in December…A further reduction in the policy rate at the December meeting is not a foregone conclusion. Far from it.” So, the interest rate game continues, however mortgage rates fell as the housing situation seems to be struggling back to some normal balance.

With the lack of reportable data and investors ignoring the political shenanigans in Washington, we enter the final two months of 2025 on a good note.

As mentioned last week, I am at my niece’s wedding and will be back at it on Monday.

Thanks,

Mike