Weekly Market Performance — October 31, 2025

Markets Blog

David Matzko, LPL Research

LPL Research provides its Weekly Market Performance for the week of October 27, 2025. Capital markets faced an action-packed week with events ranging from trade talks to global central bank decisions to Magnificent Seven earnings reports. Amid both tricks and treats throughout the week, U.S. stocks managed to hold on to weekly and monthly gains through Friday's Halloween session. In addition to monitoring developments in the U.S., international markets faced a busy week of local headlines as well. Elsewhere, Treasury market volatility ramped back up following Wednesday’s Federal Reserve (Fed) decision, while commodities edged lower and the dollar firmed against its peers.

Index Performance

U.S. and International Equities

U.S. Equities: Major averages traded higher over the last five days, also securing another monthly gain to mark the S&P 500’s sixth straight monthly advance — its longest streak since 2021. The Russell 2000 Small Cap Index trimmed monthly returns this week but ended higher in October. Major averages persevered through a brief slide, choppy price action, and negative breadth for much of the week after the Fed delivered a hawkish-leaning rate cut and announced the end of quantitative tightening. After fulfilling expectations of another 0.25% rate reduction, December rate-cut expectations eased to roughly 63% and stocks dropped after Fed Chair Jerome Powell downplayed the odds of the potential cut and noted strongly differing committee member opinions on how to proceed in December.

Just hours later, Google-parent company Alphabet (GOOG/L) posted strong cloud unit performance and a confident outlook, which was countered by poorly-received results from Microsoft (MSFT) and scrutiny around Meta’s (META) artificial intelligence (AI) infrastructure spending. META tumbled 11% on Thursday as big tech broadly traded mixed to drag major averages lower — overshadowing the U.S.-China trade truce, which rolled back tariff rates and export controls. Nonetheless, the Magnificent Seven briefly powered a Friday rally after Amazon (AMZN) posted its fastest cloud-unit growth in three years with expectations for more to come, and Apple (AAPL) was lifted by favorable holiday guidance and better-than-expected revenue. After a strong morning session, the rebound slowed Friday afternoon as skepticism around Wall Street’s blistering run rose. In other corporate news, NVIDIA (NVDA) announced a deal to expand artificial intelligence (AI) infrastructure globally, unveiling plans to supply chips to South Korea’s biggest firms on Friday, while Qualcomm (QCOM) announced a move into data center chips earlier in the week.

International Equities: European equities printed moderate losses this week but remained above the monthly flatline for the fourth consecutive month. Monetary policy was also in focus across the pond with the European Central Bank (ECB) leaving rates unchanged, as expected. The STOXX 600 turned lower after ECB President Christine Lagarde cited inflation remaining above target, which was confirmed on Friday as core consumer inflation remained unchanged at 2.4% in October — further weighing on stocks. Also from the macro calendar, Thursday's reports indicated annual economic growth cooled last quarter. Earnings leaned positive, with automaker Porsche broadly matching expectations following recent profit warnings, while company leadership signaled a better 2026 is expected. Plus, Mercedes-Benz confirmed its outlook and unveiled buyback plans, while Deutsche Bank posted strong quarterly revenue.

Major Asian markets ended mixed on the week and for the month of October amid a flurry of local headlines. South Korea led weekly gains after Washington and Seoul agreed to a trade framework overnight Wednesday, receiving an additional lift to end the week following NVDA’s announcement. Arguably, the biggest story of the week for the region was the U.S.-China trade truce, although both Hong Kong and mainland China ended the week modestly lower as the agreement appeared to have been mostly expected and priced in, leading investors to ‘sell the news’ of the deal. Headlines were also packed in Japan, which saw healthy gains for the TOPIX and a 6.3% surge in the Nikkei (bolstered by tech strength) as investors digested Senae Takaichi’s confirmation as Prime Minister and Thursday’s Bank of Japan (BOJ) hold, both pointing to expansionary policy.

Fixed Income, Currency, and Commodity Markets

Fixed Income: Core bonds, measured by the Bloomberg Aggregate Index, traded lower this week. The rate-sensitive two-year yield added 10 basis points (0.1%) and the 10-year yield gained nine basis points (0.09%). Yields jumped after Fed Chair Jerome Powell tempered hopes of a third consecutive rate cut, sending yields on most tenors higher by at least 10 basis points. Powell also announced that the central bank will stop unwinding its Treasury holdings on December 1, marking the end of an initiative which began over three years ago in June 2022 and pulled more than $2 trillion out of the financial system. The Fed will continue the runoff of its mortgage-backed securities holdings, currently at a pace of around $35 billion a month, and will reinvest the proceeds in Treasury bills to work toward its goal of a primarily Treasury-based portfolio. The move comes after signals of stress in money markets have intensified recently, with funding costs rising as liquidity dried up. As one example, the Fed’s standard repo facility (SRF) was tapped for between $2 billion and $20 billion per day in 10 of the last 13 trading days. The end of QT may be taken as a move to avoid distortions seen during previous QT cycles, although the central bank offered no indication of adding liquidity at this time, leaving the door open to continued repo market volatility.

Commodities and Currencies: The broader commodities complex edged lower this week. West Texas Intermediate (WTI) crude oil dropped as supply concerns remained front and center ahead of the upcoming OPEC+ meeting, while the U.S.-China trade truce also weighed on prices. Losses were capped, however, by a larger-than-expected drawdown in U.S. crude and production stocks and held gains after false reports that the White House is considering strikes on military targets in Venezuela. Meanwhile, gold posted its second straight weekly loss, breaking below $4,000/ounce as the removal of U.S.-China trade tensions and reduced odds of an aggressive Fed rate-cutting cycle pressured bullion prices. Nonetheless, gold remained in positive territory for the month. In currencies, the dollar strengthened notably — with the U.S. Dollar Index inching back toward 100 — on hawkish Fed meeting takeaways and on yen weakness as the BOJ left rates unchanged, renewing optimism around expansionary policy.

Economic Weekly Roundup

Fed Flying with Limited Visibility. The Federal Open Market Committee (FOMC) decided to cut rates to a range between 3.75% and 4.00% as the job market becomes more of a concern for policymakers. Growth signals are less clear. AI-related investments in data centers and other infrastructure are significant drivers for growth and are less impacted by interest rate policy. But an extended government shutdown could increase recession risk. With its conflicting dissents, the Fed decision is reminiscent of September 2019, when the Committee cut rates, but some wanted a more aggressive cut, while others preferred no change at all. Remember that at that time, the economy was adjusting to the selective tariffs implemented during Trump 1.0.

Wednesday afternoon’s decision included a full stop of the Fed’s reduction of aggregate securities holdings on December 1. This is not a complete surprise, but does signal their concern about the fragilities in the markets. As some government data are unavailable, the alternatives likely include private-sourced inflation data from ISM surveys, NFIB’s small business pricing plans, NAR’s existing and new home prices, and the inflation reports from the Fed Banks of St. Louis and Cleveland. The private-sourced job data we track is the Conference Board employment snapshot, plus ADP employment change, Revelio labs, and the hiring data from the Fed Bank of Chicago. In our view, the scenario is causing the Fed to fly with limited visibility and is still on a mission to ease rates amid a weak job market. The downside risks within the job market will likely ensure the Fed will continue to cut rates in December and throughout the next year. We’ve seen Powell sound hawkish at press conferences before, so investors should be focused on business signals, not the chair’s rhetoric.

The Week Ahead

The following economic data is slated for the week ahead:

• Monday: S&P Global U.S. Manufacturing PMI (Oct final), ISM Manufacturing Index (Oct), Construction Spending (Sep), Wards Total Vehicle Sales (Oct)

• Tuesday: Trade Balance (Sep), JOLTS Job report (Sep), Factory Orders (Sep), Durable Goods Orders (Sep final), Capital Goods Orders and Shipments (Sep final)

• Wednesday: MBA Mortgage Applications (Oct 31), ADP Employment Change (Oct), S&P Global U.S. Services and Composite PMIs (Oct final), ISM Services Index (Oct)

• Thursday: Challenger Job Cuts (Oct), Nonfarm Productivity (3Q preliminary), Unit Labor Costs (3Q preliminary), Initial Jobless Claims (Nov 1), Continuing Claims (Oct 25), Wholesale Trade Sales (Sep), Wholesale Inventories (Sep final)

• Friday: Change in Nonfarm, Private, and Manufacturing Payrolls (Oct), Unemployment Rate (Oct), Underemployment Rate (Oct), Average Hourly Earnings (Oct), Average Weekly Hours All Employees (Oct), University of Michigan Sentiment report (Nov preliminary), New York Fed One-Year Inflation Expectations (Oct), Consumer Credit (Sep)

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.

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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.

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