It was an extremely busy week on Wall Street as investors received earnings results from nearly a third of the S&P 500, including highly anticipated results from Apple, Google, Microsoft, Meta, and Amazon.  Results from these mega-cap names came in better than expected; however, the increased AI capital expenditure guidance raised questions about margins and return on investment once again.

Price action following the announcement of these earnings was mixed, with shares of Microsoft, Google, and Amazon trading higher. In contrast, a $15 billion tax charge from Meta gave investors reason to sell, and Apple’s results seemed to have already been factored into the stock.  According to FactSet, 64% of S&P 500 companies have reported earnings, with 83% posting better bottom-line results and 79% beating revenue estimates.   EPS growth in the third quarter is 10.7% and is the 4th consecutive quarter of double-digit EPS growth.  The revenue growth of 7.9% is better than what was expected at the beginning of the quarter.

President Trump started the week in Asia and returned to the US with multiple trade deals.  Japan and South Korea both made significant commitments to invest in the US and strengthen their military ties and vowed to secure and increase the production of critical minerals.

President Trump met with Chinese President Xi, and the leaders agreed to pause the increase of tariffs for a year. As part of this agreement, the US reduced its Fentanyl tariff, while China relaxed its export restrictions on rare earth metals and indicated that it would begin purchasing US soybeans. There were rumors that Xi and Trump would discuss the use of NVidia’s Blackwell GPUs, but there was no acknowledgment that this topic was discussed in their meeting.  Japan’s stock market increased by 6.3% for the week, while South Korea’s market rallied by 4.2%.  China’s market ended the week flat.

As expected, the Federal Reserve cut its monetary policy rate by twenty-five basis points to 3.75%-4%. This is the second quarter-point cut this year, coming amid concerns related to a slowing labor market. The Fed also announced that it would end its quantitative tightening program, also known as balance sheet reduction, starting December 1, 2025.  The decision to cut came with two dissents. One member was in favor of a fifty-basis-point cut, while the other member thought the committee should have maintained the policy rate.  It is clear that the Federal Reserve is divided on the path of its monetary policy as inflation stays above target, while job growth appears to be weakening.

The probability of a December rate cut fell from over 90% to 65% after Chairman Jerome Powell said that a December rate cut is not a “forgone conclusion”.  It is also worth mentioning that these decisions become even more difficult in the absence of government-created economic data, due to the ongoing government shutdown.

The S&P 500 gained 0.7% for the week, was up 2.27% for the month of October, and is up 16.3% year to date.  he Dow increased by 0.8%, was up 2.5% for the month of October, and has risen 11.8% this year. The NASDAQ rose by 2.2% for the week, 4.69% for October, and is up 22.9% year-to-date. The Russell 2000 lost 1.4% on the week, was up 1.76% in October, and is up 11.2% this year. US Treasuries sold off across the curve, with shorter tenured paper taking the brunt of the sell-off. The 2-year yield increased by thirteen basis points to 3.61%, while the 10-year yield increased by ten basis points to 4.10%. Oil prices fell by $0.52 to $60.95, losing 2.2% in the month of October. Gold prices fell by 3.4% or $141.30 to close the week at $3,996 per ounce. Gold’s price was up 3.16% in October.  Copper’s price fell by $0.03 to $5.09 per Lb. Bitcoin’s price fell by 1.8% or $2,000 to $110,400.

It was quiet again on the economic data front.  The FHFA Housing Price Index increased by 0.4% versus the estimate of 0%. The S & Case-Shiller House Price Index increased by 1.6%, slightly below the 1.7% consensus estimate. Consumer Confidence declined to 94.6 from 95.6.  Finally, the Chicago PMI came in at 43.8, versus the estimated 41.1.