October 2025 Monthly Market Update

Equities extended their advance through October with the S&P 500 gaining 2.3% on the month to bring its YTD return to 17.5%. Leadership once again came from large-cap technology and AI-oriented companies as evidenced by the Nasdaq rally of 4.7%. International developed markets were up 3.4% in local currency terms for the month but only 1.2% in USD terms thanks to an appreciating USD (+2%), bringing YTD results up to 26.6%. Emerging markets surged 4.2% with Korea and Taiwan benefiting from the global rally in the AI boom. In fixed income, interest rates stayed relatively flat in October with the 10-year note closing the month at 4.1%, down modestly from the 4.58% level beginning the year. Municipal bonds had a strong month with favorable supply/demand dynamics contributing to a 1.2% gain. Commodity prices were up in October driven largely by agricultural, industrial metals, and gold which posted a new record high. Energy prices, however, have remained relatively calm with oil and gas prices relatively flat on the year.

Investors have been in somewhat of a data vacuum growth-oriented economic releases due to the government shutdown which just set a new record for the longest duration on record. Data aside, seemingly positive economic momentum continued through October with continued signs of resilient personal consumption, robust business capital expenditures going toward AI infrastructure buildout, inflation rising but not beyond expectations, and business survey data improving given fading tariff uncertainty.

On the policy front, the Federal Reserve continued its measured easing campaign, cutting the federal-funds rate by 25 basis points to 3.75 – 4.00 percent and formally ending its balance-sheet runoff program to counter signs of waning liquidity in the banking system. Officials emphasized progress toward their inflation target while acknowledging the need to guard against labor-market deterioration. Trade policy remained an intermittent source of uncertainty as tariff implementation and court challenges progressed in tandem, including an active SCOTUS case examining executive authority under the International Emergency Economic Powers Act. Fiscal developments were limited following resolution of the late-September government shutdown, with spending patterns and deficits largely tracking prior projections. Globally, major central banks maintained a similar tone—ECB holding policy steady while the Bank of Japan signaled further steps toward normalization.

Taken together, October was another constructive month for risk assets with strong corporate fundamentals, a trifecta (monetary, fiscal, regulatory) of growth-oriented policy fronts, and consumer spending that keeps on ticking despite higher prices. Short-term risks are ever-present, currently including a slowing labor market, some early signs of credit stress, and a narrow AI-centric stock market, but through October, markets and the economy have proven highly resilient.