October Market Recap
US equities rose again in October, which makes it six months in a row of gains for the S&P 500, the longest “monthly winning streak” in four years. The NASDAQ has risen higher in seven consecutive months, its longest run since 2018.
Corporate earnings continued to outperform expectations and another rate cut from the Federal Reserve kept optimism high. The US federal government shutdown lingers on, but investors hardly seem to care.
Only six of the 11 sectors in the S&P 500 were positive last month but the sector with the heaviest weighting (Technology) again dragged the major benchmarks to new heights. The Tech sector increased 6.2% in October. Health Care (+3.5%) also had a strong month. Materials (-5.1%) delivered the worst returns.
Benchmark Returns: October 2025 | YTD 2025
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Dow Jones
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S&P 500
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NASDAQ
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+2.51% | +11.80%
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+2.27% | +16.30%
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+4.70% | +22.86%
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|---|
Concern seems to be building that perhaps this rally which began in mid-April has run too far too fast. Yet, climbing the proverbial wall of worry is what stocks do best.
The S&P 500 ended October trading at roughly 23 times forward earnings estimates, which is 24% more expensive than its 10-year average (18.6). With that in mind, it’s fair to wonder how much further multiples can expand. If the stock rally is to continue, it feels like corporate earnings will need to do the heavy lifting.
So far, earnings have been up to the task. Two-thirds of the way through Q3 reporting season, the cumulative earnings growth of S&P 500 companies has been 10.7% from a year earlier. If that pace holds, it will be the fourth consecutive quarter of double-digit earnings growth and noticeably better than the 7.9% growth forecasted on September 30.
The US and Chinese governments agreed to a deal between the world’s two largest economies that will partially roll back tariffs implemented earlier this year. President Trump said the total combined tariff rate on Chinese goods will fall to roughly 47% (down from 57% previously). The deal is less of a “grand bargain” and more of a de-escalation, but it does represent a step in the right direction and should ease the costs for consumers in both countries.
The Federal Reserve on October 29 cut interest rates by 0.25% for the second time in two months. The move was entirely expected but Fed Chair Jerome Powell did not commit to another cut in December. Such a move “is not a foregone conclusion,” according to Powell, who cited a lack of consensus among Fed Governors.
The US federal government remains shut down and is likely to surpass a 35-day shutdown from 2018-19 as the longest in American history. Democrats are demanding an extension to a deadline that would otherwise result in medical premiums rising by an estimated $1,000 per month for millions of Americans. So far, little tangible progress has been made between members of Congress.
Bond yields remained steady in October. The yield on 10-year US Treasuries ended the month at 4.10% (down from 4.15% a month earlier). Investors should expect yields to keep falling in the months to come if the Fed’s rate-cutting continues.
Small-cap and mid-cap stocks increased less than large-caps last month. The Russell 2000 index gained 1.8%. The Russell Mid-Cap index fell 0.8%. International stocks mostly kept pace. The All Country World Ex-US index, which includes Non-US Developed and Emerging Market equities, was up 2.1%.
Ben Marks
Chief Investment Officer
Brett Angel
Senior Wealth Advisor
Investment Advice offered through Marks Group Wealth Management, a Registered Investment Advisor.
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The Standard & Poor’s 500 Index is a capitalization weighted index of 500 stocks 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 measures all NASDAQ domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index.
The Dow Jones Industrial Average is comprised of 30 stocks that are major factors in their industries and widely held by individuals and institutional investors.
Russell 1000 Growth Index measures the performance of those Russell 1000 companies with higher price to-book ratios and higher forecasted growth values.
Russell 1000 Value Index measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values.
The Russell 2000 Index is an unmanaged index generally representative of the 2,000 smallest companies in the Russell Index, which represents approximately 10% of the total market capitalization of the Russell 3000 Index.
MSCI EAFE Index consists of the following developed market country indices: Australia, Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, and the United Kingdom.
The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets.
VIX-The Chicago Board Options Exchange’s CBOE Volatility Index, a popular measure of the stock market’s expectation of volatility based on S&P 500 index options. It is calculated and disseminated on a real-time basis by the CBOE, and is often referred to as the fear index or fear gauge.
