US equities posted solid gains during the week of October 13-17, 2025, with all major indexes recovering from the previous week's sell-off despite facing challenges. The S&P 500 rose 1.7% for its best week since August, while the Nasdaq gained 2.1% and the Dow Jones advanced 1.6%. Small-cap stocks outperformed, with the Russell 2000 climbing 2.4%, while credit spreads closed 3-11bps tighter. Gold continued its strong rally, with 6% gains in the week, trading at all-time highs.
The main positive driver was the easing of U.S.-China trade tensions after Trump softened his previously harsh rhetoric on tariffs, sparking a broad market rally. Strong third-quarter results from major banks provided additional support, while 86% of the 58 S&P companies which reported beat earnings expectations.
Despite these positive drivers, the ongoing government shutdown created uncertainty around key economic data releases, while concerns about regional bank health drew comparisons to previous banking crises. However, continued AI-related optimism, particularly around corporate partnerships like Broadcom and OpenAI, helped sustain the tech rally and overall gains.
