WEEKLY MARKET RECAP – OCTOBER 31, 2025

Major U.S. large-cap indexes extended their rally for a third straight week, setting new record highs, while mid- and small-cap benchmarks declined. The NASDAQ led the way with a 2.3% weekly gain, boosted by strong earnings from several of its largest technology constituents.

As expected, the U.S. Federal Reserve cut its benchmark interest rate by a quarter percentage point for the second consecutive meeting. However, Fed Chair Jerome Powell tempered expectations for another cut in December, noting that such a move “is not a foregone conclusion” amid a lack of consensus among policymakers.

For October, the S&P 500 and Dow each advanced more than 2%, marking their sixth consecutive monthly gains. The NASDAQ rose 4.7% for the month—its seventh straight monthly increase.

Robust corporate results during the height of earnings season prompted analysts to raise their overall profit outlooks once again. According to FactSet, analysts now estimate that S&P 500 companies’ third-quarter earnings grew by an average of 10.7%, up from the 8.0% forecast at the start of the season.

On the global front, the leaders of the United States and China announced an agreement to partially roll back tariffs imposed earlier this year. President Trump said the combined tariff rate on Chinese imports would drop from 57% to 47%. The accord also covers additional issues, including rare earth export restrictions, fentanyl trafficking, and U.S. soybean trade.

In fixed income markets, U.S. Treasury yields rose, with most of the increase occurring on Wednesday following Powell’s remarks that introduced uncertainty about December’s policy outlook. The 10-year Treasury yield ended the week at 4.09%, up from 3.99% the week before.

Small-cap stocks lagged sharply behind. The Russell 2000 Index fell about 1.3% for the week, with most of the drop occurring after the Fed’s midweek announcement.

The ongoing U.S. government shutdown, now entering its second month, continued to disrupt the release of key economic data. Investors did not receive the initial third-quarter GDP estimate, and upcoming reports—including those on employment, construction spending, trade, and factory orders—remain in doubt for the week ahead.