S&P 500 Advances for a Sixth Straight Month

Performance for Week Ending 10.31.2025:

The Dow Jones Industrial Average (Dow) added 0.8 percent, the Standard & Poor’s 500 Index (S&P 500) gained 0.7 percent, and the Nasdaq Composite Index (Nasdaq) finished up 2.2 percent. Sector breadth was negative with seven of the 11 S&P sector groups closing lower. The technology sector (3.0 percent) was the best performer while real estate (-3.9 percent) was the weakest.

*See below for Index Definitions

MARKET OBSERVATIONS: 10.27.2025  – 10.31.2025

The S&P 500 finished the week higher, its third straight weekly gain, as investors looked past hawkish comments from Fed Chair Powell and mixed earnings from Mag-7 cohorts. For the month of October, the broader market index added 2.3 percent, its sixth consecutive month of gains. A 25-basis point Federal Reserve (Fed) rate cute, a trade truce between China and the U.S., and signs A.I. capex spending remains robust offset concerns about labor market weakness.

FOMC Meeting: As widely expected, the Fed cut its benchmark rate by 25 basis points to a range of 3.75 – 4.0 percent. In their post-meeting statement, Fed policymakers repeated their assessment that “job gains have slowed” and said, “risks to employment rose in recent months.” Officials characterized economic growth as “moderate” and said inflation “has moved up since earlier this year and remains somewhat elevated.” Fed officials on both ends of the policy spectrum opposed the decision. Governor Miran, who joined the central bank last month and is on unpaid leave from his post as chair of the White House Council of Economic Advisers, dissented in favor of a larger, half-point reduction. Kansas City Fed President Schmid said he preferred not to cut rates at all, after supporting last month’s rate reduction.

In the post-meeting press conference, Fed Chair Powell threw cold water on a December rate cut saying "a further reduction in the policy rate at the December meeting is not a foregone conclusion—far from it," adding "policy is not on a pre-set course." According to Bloomberg’s World Interest Rate Probability tool, the odds of a December cut fell to 64 percent from 92 percent before the meeting. According to Powell, policymakers are grappling with “two-sided risks” with inflation risks tilted to the upside and labor market risks tilted to the downside. Powell also acknowledged there were “strongly differing views about how to proceed” among committee members.

Q3 Earnings: As of Friday, 317 members of the S&P 500 have released fiscal third quarter results, with 82 beating expectations. Aggregate earnings for this group are up 10.3 percent from a year ago, solidly ahead of the 7.2 percent projected year-over-year growth rate at the start of earnings season. On the sector level, the biggest upside surprises are coming from consumer discretionary and healthcare. In terms of year-over-year growth, technology and financials are leading the pack.

Economic Roundup: Consumer confidence in the U.S. deteriorated modestly in October, according to a report released by the Conference Board. The Conference Board said its consumer confidence index dipped to 94.6 in October from an upwardly revised 95.6 in September. The modest decrease in the headline index came as the expectations index slid to 71.5 in October from 74.4 in September, falling further below the threshold of 80 that typically signals a recession ahead. Meanwhile, however, private payroll processor ADP said that the U.S. labor market showed signs of bouncing back in October, with the average weekly increase in employment tallying 14,250 over the four-week period ended Oct. 11. Pending sales of existing U.S. homes stalled in September, suggesting job market anxiety kept potential buyers sidelined despite a welcome easing in mortgage rates. An index of contract signings held at 74.8 after climbing a revised 4.2% a month earlier to the highest level since March, according to National Association of Realtors data. Economists expected a 1.2% increase, based on the median estimate in a Bloomberg survey.

In Other Fed News: Dallas Fed President Logan said the Federal Open Market Committee should have maintained the federal funds rate rather than voting to lower it given the current outlook, and that they may not need to cut rates further in December. Atlanta Fed President Bostic says that he backed the Fed's quarter-point rate cut this week—the second in a row—because he believes monetary policy remains restrictive and continues to push back against inflation. Kansas City Fed President Schmid said he voted against the U.S. central bank’s decision to lower interest rates this week because he’s concerned that economic growth and investment will put upward pressure on inflation. Cleveland Fed President Hammack said she disagreed with a decision to cut interest rates, citing ongoing inflation risk. “I would have preferred to have held rates steady at the meeting,” Hammack said at a conference in Dallas.

Meanwhile, Treasury Secretary Bessent affirmed that the list of candidates to become the next Federal Reserve chair has been whittled down to five finalists. The five people include former Fed governor Kevin Warsh, National Economic Council Director Kevin Hassett, and current Fed governor Waller—three names previously mentioned by Trump, who will make the final decision. The two others on Bessent's shortlist are Fed governor Bowman, who also serves as the central bank's top banking regulator, and BlackRock fixed-income chief investment officer Rick Rieder. Current Fed Chair Powell's term as chair ends this May.

Market View: We believe the macroeconomic environment remains supportive of additional upside over the remainder of the year. The economy remains resilient, earnings are growing, the Fed is cutting rates, fiscal policy is expected to become a tailwind in the quarters ahead, oil prices are near the lowest level in four years, A.I. capex spending in booming, and seasonals are favorable between now and year-end. Collectively these things should keep the current bull market rally intact.

The Week Ahead: The U.S. government shutdown will continue to affect data releases including the October jobs report, which was scheduled to be released on Friday. Instead, for signals on the labor market, investors will look to the October ISM indices (Monday for manufacturing and Wednesday for services) and the ADP Employment Change data on Tuesday. Another notable indicator due out will be the University of Michigan consumer survey on Friday. It will be another busy week for earnings, with 133 members of the S&P 500 scheduled to release results during the week. Highlights include Palantir, Uber, Pfizer, Advanced Micro Devices, and McDonald’s. Fed Heads will be out and about with a dozen speeches scheduled throughout the week, including Fed Governor Waller on Thursday.

— By Michael Schwager, Chief Market Strategist, Managing Director

Definitions

The Dow Jones Industrial Average is a price-weighted average of 30 blue-chip stocks that are generally defined as the leaders in their industry. It has been a widely followed indicator of the stock market since October 1, 1928.

Wilshire 5000 Total Market Index^SM represents the broadest index for the U.S. equity market, measuring the performance of all U.S. equity securities with readily available price data. The index is comprised of virtually every stock that: the firm's headquarters are based in the U.S.; the stock is actively traded on a U.S. exchange; the stock has widely available pricing information (this disqualifies bulletin board, or over-the-counter stocks). The index is market cap weighted, meaning that the firms with the highest market value account for a larger portion of the index.

Standard and Poor's 500^© Index is a capitalization-weighted index of 500 stocks. The index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

The Nasdaq Composite Index is a broad-based capitalization-weighted index of stocks in all three Nasdaq tiers: Global Select, Global Market and Capital Market. The index was developed with a base level of 100 as of February 5, 1971.

This material contains opinions of the author, but not necessarily those of Guggenheim Partners, LLC or its subsidiaries. The opinions contained herein are subject to change without notice. Forward looking statements, estimates, and certain information contained herein are based upon proprietary and non-proprietary research and other sources. Information contained herein has been obtained from sources believed to be reliable, but are not assured as to accuracy. Past performance is not indicative of future results. There is neither representation nor warranty as to the current accuracy of, nor liability for, decisions based on such information. No part of this material may be reproduced or referred to in any form, without express written permission of Guggenheim Partners, LLC.