Weekly Commentary (10/27/25) – Major Indices Jumped to Record Highs Last Week

Markets surged to record highs last week, driven by cooling inflation and strong corporate earnings. 
           
For the week, the DJIA gained 2.24% while the S&P 500 moved higher by 1.93%.  The tech-heavy Nasdaq advanced by 2.31%.  International markets joined the party and moved higher as well. For the week, the MSCI EAFE Index (developed countries) finished ahead by 1.25% while emerging market equities (MSCI EM) closed up 2.05%.   Small company stocks, represented by the Russell 2000, moved materially higher as the index shot up 2.51.  Fixed income, represented by the Bloomberg Aggregate, added 0.17% for the week. As a result, the 10 YR US Treasury closed at a yield of 4.02% (unchanged from the previous week’s closing yield of ~4.02%).  Gold prices closed at $4,118.40/oz – down 1.71% as the U.S. dollar index rose by 0.51%. Oil prices jumped higher to close at $61.50 per barrel, up 7.61% on the week after the U.S. blacklisted Russia’s biggest oil companies and cut off Russian revenue for the war.  

Last week saw Services and Manufacturing PMIs both inch higher.  The Manufacturing PMI rose to 53.3 (a 2-month high) while the Services PMI rose to 55.2 (a 3-month high).  Consumer Sentiment pulled back slightly to 53.6 from the expected 54.5 (no surprise given the government shutdown).  The big news last week came on Friday as September CPI headline and core inflation came in at 3.0% y/y, less than the expected 3.1% level.

The most pertinent economic news items in the week ahead will be the FOMC meeting on Wednesday when the Fed will likely cut rates 25bps; the release of Q3 GDP on Thursday that should give some insights into economic growth; and, on Friday, the release of U.S. Personal Income and Spending for September, the Chicago PMI for October and the Q3 Employment Cost Index.  Lastly, this week is the busiest week for third quarter earnings releases as over 150 S&P 500 companies report.  Earnings reports will most likely set the tone for the markets for the next few weeks.  Of course, the government shutdown continues, and the economy and markets will begin to feel the effects of so many federal workers missing paychecks (along with key economic data releases being disrupted).

Momentum continues for the economy and the market.  Enjoy the ride, but don’t be surprised to see a short-term pause or pullback.  That said, seasonality is still favorable into year-end. Investors should not make material changes to their portfolios due to concerns about the government shutdown or geopolitical events … the markets will adapt as they always do.  We urge investors to trim overweight positions and to stick close to long-term asset allocation targets.