Weekly Market Performance — October 17, 2025

Markets Blog

David Matzko, LPL Research

LPL Research provides its Weekly Market Performance for the week of October 13, 2025. Major U.S. averages ended a volatile week higher amid a flurry of headlines. Lingering trade tensions, the unofficial earnings season kick-off, and sudden regional bank jitters sparked up-and-down trading for most of the week, while international markets ended mixed amid local political developments and earnings. Fixed income markets gained ground over the last five weeks as investors parsed potential cracks in the credit market. Meanwhile, commodities gained ground as gold continued to surge, while the U.S. dollar weakened against its peers.

Index Performance

U.S. and International Equities

U.S. Equities: Amid a weeklong stretch of volatility, stocks displayed some resiliency with a mostly higher finish for major U.S. benchmarks. All three major averages delivered weekly gains as U.S.-China trade tensions showed some signs of easing as both sides displayed willingness to meet and negotiate amid back-and-forth attempts to gain leverage ahead of upcoming trade talks. Buy-the-dip resiliency and bolstered rate cut expectations also contributed to the weekly upside, while an upbeat start to earnings season was another bright spot. Third quarter results from big banks broadly topped Wall Street expectations, benefiting from a steepening yield curve, a pickup in deal activity with still full investment banking backlogs, and ongoing strength in trading and wealth management. Bank of America (BAC), Citigroup (C), JPMorgan Chase (JPM), and Wells Fargo (WFC) were among the initial wave of reports Wednesday, while financial services results announced through week’s end continued the positive start.

Despite strong quarterly reports from the largest money center banks, the S&P 500 Financials sector ended the week at the bottom of the leaderboard. Regional bank jitters hit the sector Thursday after Zions Bancorp (ZION) disclosed a $50 million loan charge-off and Western Alliance Bancorp (WAL) stated it had exposure to the same borrowers, broadly roiling markets. Early takeaways suggested the events appeared isolated, but they fueled fresh discussions around potential cracks in riskier credit markets, leading to fragile sentiment and heightened attention on the recent bankruptcies of First Brands and Tricolor.

International Equities: European regional benchmarks traded higher over the last five days despite mixed performance among exchanges. France’s CAC 40 outperformed in somewhat of a relief rally after Prime Minister Sebastien Lecornu was reappointed by President Macron and survived two no-confidence votes Thursday — thanks to recent concessions on pension reforms and winning critical support from the Socialist Party. Elsewhere, the U.K. lagged as finance minister Rachel Reeves continued to lay the foundation for higher taxes on the wealthy. On the earnings front, shares of Swiss food company Nestle gained after topping consensus estimates and unveiling updated turnaround plans. Among other highlights, surprise sales strength from French luxury conglomerate LVMH and better-than-expected orders from Dutch chipmaker ASML lifted both names. Meanwhile, French tiremaker Michelin dropped after slashing its outlook, citing weaker North American performance.

In Asia, major markets closed broadly mixed on the week, despite a mid-week surge that fueled record highs. Trade tensions between Beijing and Washington remained at the forefront of investor focus, while headlines continued to revolve around tit-for-tat measures from both sides. Although, the overall rhetoric from the White House leaned softer. Nonetheless, Hong Kong and mainland China posted weekly declines while South Korea bucked the trend with a weekly gain as a trade deal reportedly was drawing closer. Japanese shares were pressured by political concerns in the wake of last Friday’s abrupt collapse of the ruling coalition, sparking fiscal concerns, while U.S. bank jitters were another headwind. Taiwan got some help from Taiwan Semiconductor but ended flat, while India gained, receiving an extra boost Friday after regulators announced an algorithmic and high-frequency trading framework upgrade.

Fixed Income, Currency, and Commodity Markets

Fixed Income: Core bonds, measured by the Bloomberg Aggregate Index, traded higher this week following Thursday’s Treasury market rally, while corporate credit markets also traded higher over the last five days. U.S. corporate credit markets have remained resilient through much of 2025, yet beneath the surface, signs of stress are beginning to emerge. Total yields are still elevated, which has supported steady inflows into taxable bond funds and ETFs. Plus, both foreign and institutional demand have also remained strong this year, which has helped keep spreads range bound. However, this strength masks growing fragility in the broader credit landscape, particularly amongst lower-rated corporate borrowers.

A series of recent collapses, including those of Saks, New Fortress Energy, Tricolor Holdings, and First Brands Group, to name a few, have inflicted losses of 60% or more on investors, prompting worries that these kinds of events may not be one-offs. While some of these losses were slow moving, it's clear that volatility has returned to the corporate credit markets. Mega and large company bankruptcies have risen meaningfully this year, as after years of high interest rates — which are good for investors but not so great for borrowers — are clearly weighing on some companies. Now, the concern isn't that we're on the verge of a crisis, at least not as long as the economy continues to grow as we expect; it's more that investors aren't getting paid to take on these types of risks with corporate bond yields that are barely above Treasury yields.

While recent widening in the high yield market has taken place, in our view, spreads are still tight given current conditions and rising idiosyncratic risks. While the overall credit market remains stable, the divergence between investment grade and high yield sectors is becoming increasingly pronounced. The recent uptick in defaults and distressed exchanges among speculative-grade issuers underscores the vulnerability of companies with weaker balance sheets and limited access to capital.

Commodities and Currencies: The broader commodities complex rebounded from last week’s decline to gain ground over the last five days. West Texas Intermediate (WTI) crude oil remained under pressure as prices dropped near multi-month lows below $58 per barrel. Three consecutive U.S. crude stock builds coinciding with record high production continued to raise supply concerns, while ongoing U.S.-China trade tensions posed potential headwinds to demand. Natural gas prices also declined on mild weather forecasts and ample storage. In precious metals, despite paring back weekly gains Friday on easing trade tensions, gold posted a strong weekly advance on support from regional bank and credit market jitters and bolstered rate cut bets to rally well above $4,000/ounce. The U.S. dollar weakened slightly on bank concerns as investors turned to haven assets, lifting the Swiss franc, while the extensions of the government shutdown began to act as a headwind due to potential economic pain.

Economic Weekly Roundup

Fed’s Biege Book Only Covered Pre-Shutdown Period. The slowdown started before the government shutdown, which will only exacerbate the weakness. Inflation pressures were mixed across the country. Waning demand in some markets reportedly pushed prices down for some materials, such as steel and lumber.

Wednesday’s publication covered the period of late August and September, so this will not give us insights into business responses during the shutdown. That said, bifurcated business activity was roughly the same as earlier in the summer: firms saw strong demand for luxury discretionary spending from wealthy consumers and bargain shopping from lower- and middle-income households. Business demand for labor was weak across sectors, and those doing the hiring favored temporary and part-time workers over offering full-time opportunities. As expected, some firms facing tariff-induced cost pressures kept their selling prices largely unchanged to preserve market share and in response to pushback from price-sensitive clients.

Firms continue to experience a slowdown in business activity. Despite the uncertainty over tariff-induced consumer inflation, we expect the Fed to continue to cut rates in the remaining two meetings of this year. Recession risks still appear well-contained.

The Week Ahead

The following economic data is slated for the week ahead:

• Monday: Leading Index (Sep)

• Tuesday: Philadelphia Fed Non-Manufacturing Activity (Oct)

• Wednesday: MBA Mortgage Applications (Oct 17)

• Thursday: Chicago Fed National Activity Index (Sep), Initial Jobless Claims (Oct 18), Continuing Claims (Oct 11), Existing Home Sales (Sep), Kansas City Fed Manufacturing Activity (Oct)

• Friday: Headline and Core CPI (Sep), S&P Global U.S. Manufacturing, Services, and Composite PMIs (Oct preliminary), New Home Sales (Sep), University of Michigan Consumer Sentiment Report (Oct final), Kansas City Fed Services Activity (Oct), Building Permits (Sep final), Bloomberg U.S. Economic Survey (Oct)

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 –

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.

Bonds are subject to market and interest rate risk if sold prior to maturity.

Municipal bonds are subject and market and interest rate risk and potentially capital gains tax if sold prior to maturity. Interest income may be subject to the alternative minimum tax. Municipal bonds are federally tax-free but other state and local taxes may apply.

Preferred stock dividends are paid at the discretion of the issuing company. Preferred stocks are subject to interest rate and credit risk. They may be subject to a call features.

Alternative investments may not be suitable for all investors and involve special risks such as leveraging the investment, potential adverse market forces, regulatory changes and potentially illiquidity. The strategies employed in the management of alternative investments may accelerate the velocity of potential losses.

Mortgage backed securities are subject to credit, default, prepayment, extension, market and interest rate risk.

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.

Precious metal investing involves greater fluctuation and potential for losses.

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

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