Quick Takes
- Stocks Continue Higher. U.S. stocks rose in October as earnings season kicked off with the S&P 500 rising 2.3%, the Nasdaq 100 rising 4.8%, and the Dow rising 2.6% on the month as earnings, continued AI deals, and a Fed rate cut overshadowed the government shutdown and trade tensions.
- Inflation and Interest Rates. The 10Y treasury yield was down in October ending the month at just under 4.1%. CPI inflation for September came in below expectations at 3.0% while PCE inflation was delayed because of the government shutdown.
- Government Shutdown. The U.S. government shutdown, which started in early October, has resulted in 750,000 furloughed federal employees, cutoffs in SNAP benefits, and delays in economic data releases. The CBO estimates that the shutdown has already cost the U.S. economy $18 billion.
- Earnings Season. 317 companies in the S&P 500 reported earnings for Q3. 64% of the companies reported above-consensus EPS, but the median stock posing a positive earnings surprise only outperformed the S&P 500 index by 32 bps on the day following their report versus 98 bps historically.
Asset Class Performance
Large caps outperformed small caps in October. While U.S. stocks outperformed other developed markets, emerging market equities outperformed domestic equities. Stocks and U.S. bonds generally rose in October while international bonds and real estate fell during the month.
Markets & Macroeconomics
The government shutdown has reduced the availability of economic data including inflation data, payroll reports, and other data. Based on the ADP private payroll data, hiring by the U.S. private sector cut 32K jobs in September as leisure and hospitality, financial services, professional and other services shed jobs. Outside of services, natural resources/mining and construction cut a combined 9K positions while manufacturing added 2K jobs. While CPI inflation accelerated in September to 3.0% from 2.9%, the print still came in below economists’ forecasts of 3.1% core and headline inflation. The acceleration was driven primarily by energy and medical goods prices accelerating month-over-month. Consumer sentiment was relatively unchanged month-over-month as the U. of Michigan Consumer Sentiment Index fell slightly from 54.5 to 53.8 and the Conf. Board Consumer Confidence Index rose from 93.4 to 94.6 during the month. Consumer’s long-term inflation expectations increased month-over month based on the U. of Michigan survey from 3.7% to 3.9%. In manufacturing, the ISM Manufacturing PMI came in at 49.1 for September, marking the seventh consecutive month of contracting in manufacturing activity in the U.S. based on the index. The Federal Reserve cut interest rates at rates by their expected 25 bps at their meeting on October 29. Fed Chairman Powell indicated at the press conference following the announcement of the decision that the economy seemed to be on firmer footing than expected based on data prior to the shutdown as consumers continued to spend and business investment remaining strong, but the housing market continued to remain weaker. Powell attributed the slowdown in job creation to a decline in immigration as well as a decline in labor force participation in addition to lower labor demand. He also attributed the higher inflation readings since the start of the year to tariffs. Despite concerns about the labor market and the government shutdown, stocks continued to rise in October and treasuries fell slightly as the 10Y and 2Y fell by 7 bps and 3 bps respectively. The dollar index also rose after an initial decline at the beginning of the month as major U.S. technology companies continued to announced cloud computing and chip purchase deals related to their AI buildouts. The S&P 500 ended the month at 6,480.
Bottom Line: The Fed continued to cut rates. Treasuries rose slightly and the dollar strengthened despite the government shutdown.
©2025 Prime Capital Investment Advisors, LLC. The views and information contained herein are (1) for informational purposes only, (2) are not to be taken as a recommendation to buy or sell any investment, and (3) should not be construed or acted upon as individualized investment advice. The information contained herein was obtained from sources we believe to be reliable but is not guaranteed as to its accuracy or completeness. Investing involves risk. Investors should be prepared to bear loss, including total loss of principal. Diversification does not guarantee investment returns and does not eliminate the risk of loss. Past performance is no guarantee of comparable future results.
Source: Sources for this market commentary derived from Bloomberg. Asset‐class performance is presented by using market returns from an exchange‐traded fund (ETF) proxy that best represents its respective broad asset class. Returns shown are net of fund fees for and do not necessarily represent performance of specific mutual funds and/or exchange-traded funds recommended by the Prime Capital Investment Advisors. The performance of those funds June be substantially different than the performance of the broad asset classes and to proxy ETFs represented here. U.S. Bonds (iShares Core U.S. Aggregate Bond ETF); High‐Yield Bond (iShares iBoxx $ High Yield Corporate Bond ETF); Intl Bonds (SPDR® Bloomberg Barclays International Corporate Bond ETF); Large Growth (iShares Russell 1000 Growth ETF); Large Value (iShares Russell 1000 Value ETF); Mid Growth (iShares Russell Mid-Cap Growth ETF); Mid Value (iShares Russell Mid-Cap Value ETF); Small Growth (iShares Russell 2000 Growth ETF); Small Value (iShares Russell 2000 Value ETF); Intl Equity (iShares MSCI EAFE ETF); Emg Markets (iShares MSCI Emerging Markets ETF); and Real Estate (iShares U.S. Real Estate ETF). The return displayed as “Allocation” is a weighted average of the ETF proxies shown as represented by: 30% U.S. Bonds, 5% International Bonds, 5% High Yield Bonds, 10% Large Growth, 10% Large Value, 4% Mid Growth, 4% Mid Value, 2% Small Growth, 2% Small Value, 18% International Stock, 7% Emerging Markets, 3% Real Estate.
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