Weekly Market Performance — October 10, 2025

Markets Blog

David Matzko, LPL Research

LPL Research provides its Weekly Market Performance for the week of October 6, 2025. Despite narrow trading for much of the week, stocks ended lower as tariff concerns returned to center stage, driving stocks sharply lower to end an otherwise catalyst-light week. Major averages were on track for a mostly higher finish, despite artificial intelligence (AI) concerns and the ongoing government shutdown, until the latest escalation in U.S.-China tensions sparked widespread selling. U.S. Treasuries ended higher this week while overseas, international markets were focused on surprise political developments in Japan and France. Commodities dropped and the dollar gained as a result of international political uncertainty.

Index Performance

U.S. and International Equities

U.S. Equities: Major equity benchmarks traded lower in the first full week of October as a catalyst-light week ended with a tariff-fueled slide. Stocks received some upside support early in the week from fresh artificial intelligence (AI) deals; however, Wall Street chatter around lofty valuations and the ongoing debate around an AI spending bubble capped sentiment. Meanwhile, the stalemate in Washington completed its first week Wednesday, with no reports of a resolution in the works and more economic data was punted — although headlines around the shutdown remained more noise than signal for investors. Broadly, stocks continued to wade through a lack of major directional drivers amid a constellation of moving pieces until fresh trade jitters dragged stocks sharply lower Friday. The S&P 500 quickly erased a modest weekly gain after President Trump stated there is “no reason” to meet with Chinese President Xi Jinping due to recent export controls on rare earth minerals, threatening a hefty increase in levies on Chinese goods. The equity benchmark was on track for its worst session since April and the CBOE Volatility Index (VIX) surged above 21 after trading mostly well below historical averages in recent months.

Amid the catalyst vacuum, early third quarter earnings reports began to trickle in. PepsiCo (PEP) shares jumped after the food and beverage company hinted at a turnaround in its U.S. beverage unit, while Delta Airlines (DAL) shares popped after topping profit forecasts and issuing well-received guidance. Among other corporate news, NVIDIA (NVDA) CEO Jensen Huang remarked on strong demand for the chipmaker’s Blackwell product, and the U.S. approved several billion dollars of NVIDIA (NVDA) chip exports to the UAE, providing the chipmaker with a fresh boost.

International Equities: European exchanges declined this week as late Friday tariff jitters pulled regional benchmarks below the week-to-date flatline. In local developments, political turmoil in France returned in earnest after French Prime Minister Sebastien Lecornu resigned 24 hours after naming a broadly criticized cabinet — just 27 days into his term — fueling worries of a deepening political crisis for the country and sending stocks sharply lower. French equities closed lower, although off weekly lows after President Macron provided Lecornu 48 hours to negotiate with political parties Tuesday to prevent deeper turmoil, before announcing Thursday that a new Prime Minister will be named Friday evening. Elsewhere, defense names faced downward pressure Friday as the ceasefire in Gaza began, a major step toward easing geopolitical tensions in the Middle East.

On the other side of the globe, Asian markets ended mixed amid holiday thinned trading. Japan traded higher over a full five-day week, supported by the surprise victory of Sanae Takaichi, making the pro-stimulus and pro-growth lawmaker the next LDP President and Japan’s first female prime minister if confirmed later this month. Stocks rallied on hopes of looser monetary and fiscal policy before trimming weekly gains Friday after LDP and Komeito party leaders stalled — with Komeito announcing its departure from the coalition after the market close. Elsewhere, Hong Kong shed over 3% over the last four days as tech shares pulled back while mainland China reversed its post-Golden Week jump to end moderately lower in a two-session week. Exchanges in Taiwan gained over their three-day week while South Korea returned to action Friday with a solid gain.

Fixed Income, Currency, and Commodity Markets

Fixed Income: Core bonds, measured by the Bloomberg Aggregate Index, traded higher this week, reversing weakness Friday in response to the latest wave of U.S.-China trade concerns. More broadly, the bond market focused on political dysfunction rearing its ugly head again. This time in France (again) after Prime Minister Sebastien Lecornu resigned after less than a month on the job after it became increasingly clear he would not be able to coalesce a majority backing in parliament. The resignation all but ensured the French government would miss the official October 7 deadline to present a new budget to parliament, with increasing odds it may need to invoke a special law to extend the 2025 fiscal framework.

Bond markets have been pushing back on developed markets, putting upward pressure on yields, as it becomes increasingly difficult for these governments to rein in their fiscal profligacy with austerity measures. With the recent news out of France, French 10-year bonds are yielding more than Italian 10-year bonds for the first time since 1999, which seems incredible for those of us that remember the European debt crisis last decade. Also adding upward pressure to global bond yields is the relative surprise selection of Sanae Takaichi as the leader of the LDP in Japan where she is expected to become prime minister later this month. She has also been vocal on monetary policy saying, “It is the government’s responsibility to determine the direction of economic and monetary policy, and the BoJ is the place to consider the best means.” After the announcement, 30-year Japanese government bond (JGBs) yields rose as expected rate hikes got priced out. France and the Japan remain important holders of U.S. Treasuries so as their home market yields increase, U.S. rates look less attractive which puts upward pressure on U.S. yields as well. And with developed market debt levels expected to continue to increase with seemingly little appetite to reduce budget deficits, long-term bond yields may need to remain elevated to attract buyers.

Commodities and Currencies: The broader commodities complex traded lower over the last five days, paring a week-to-date advance Thursday and Friday. West Texas Intermediate (WTI) crude oil prices eased in the latter half of the week as the U.S.-designed ceasefire deal in Gaza began, reducing the geopolitical risk premium factored into prices, as oversupply concerns remain top of mind for traders despite a smaller than expected OPEC+ production increase on Sunday.

Gold’s red-hot rally continued on international political dynamics and as the U.S. government shutdown drags on. The yellow metal briefly breached the $4,000/ounce mark before dropping Thursday on easing geopolitical concerns but received further support from fresh tariff jitters. Silver also gained and copper logged a weekly loss on U.S.-China tensions. The dollar strengthened against its peers as global political developments fueled losses in the euro and the yen, lifting the greenback to a 10-week high on Thursday. However, the dollar gave back part of its weekly gain to end the week.

Economic Weekly Roundup

Tariffs were the most talked about topic during the latest Fed meeting, according to the minutes released Wednesday. Tariff impacts will keep upward pressure on inflation in the near term. Inflation will not likely reach target until late 2027, which means these pressures are stickier and more persistent than anticipated several months ago, but that doesn’t mean we won’t see improvement in 2026. The dollar had stabilized and has returned to trading roughly in line with fundamental macroeconomic drivers. Foreign demand for U.S. assets remained resilient since the previous Fed meeting. Fed Governor Miran preferred a 50-basis point cut and dissented from the prevailing decision to cut by 25 basis points. Miran believes the weak labor market justified his view. His argument is reasonable if you believe the Congressional Budget Office’s estimate of the long run unemployment rate.

Futures markets may turn out to be more accurate than the FOMC’s collective projections, especially if inflation consistently declines in 2026. Investors should expect two more cuts this year followed by a pause at the January 2026 meeting.

The Week Ahead

The following economic data is slated for the week ahead:

• Monday: No economic data releases scheduled in observance of the Columbus Day and Indigenous Peoples’ Day holiday. U.S. bond market closed.

• Tuesday: NFIB Small Business Optimism (Sep)

• Wednesday: MBA Mortgage Applications (Oct 10), Empire Manufacturing (Oct), Headline and Core CPI (Sep), Real Average Hourly Earnings (Sep), Real Average Weekly Earnings (Sep), Fed Beige Book Release

• Thursday: Continuing Claims (Oct 4), Retail Sales (Sep), Headline and Core PPI (Sep), New York Fed Services Business Activity (Oct), Philadelphia Fed Business Outlook (Oct), Initial Jobless Claims (Oct 11), Business Inventories (Aug), NAHB Housing Market Index (Oct)

• Friday: Housing Starts (Sep), Building Permits (Sep preliminary), Import and Export Price Indexes (Sep), Industrial Production (Sep), Manufacturing (SIC) Production (Sep), Capacity Utilization (Sep), Net Long-term TIC Flows (Aug), Total Net TIC Flows (Aug)

IMPORTANT DISCLOSURES

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors. To determine which investment(s) may be appropriate for you, please consult your financial professional prior to investing.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk.

Indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and does not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

This material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Unless otherwise stated LPL Financial and the third party persons and firms mentioned are not affiliates of each other and make no representation with respect to each other. Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.

Asset Class Disclosures –

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High yield/junk bonds (grade BB or below) are below investment grade securities, and are subject to higher interest rate, credit, and liquidity risks than those graded BBB and above. They generally should be part of a diversified portfolio for sophisticated investors.

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The fast price swings of commodities will result in significant volatility in an investor's holdings.

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