During the week of October 20-24, 2025, U.S. equity markets delivered strong performance, with all major indices reaching new all-time highs. The S&P 500 gained 1.9%, the Nasdaq rose 2.3%. while the Dow Jones surged 2.2%. In fixed income, US Treasury yields finished the week sideways, but for the second week credit spreads traded tighter, reversing the widening we saw during the start of the month.
Three primary factors drove the positive performance: encouraging inflation data, strong corporate earnings, and improving trade relations with China. The September CPI report showed annual inflation at 3.0%, below the expected 3.1%, reinforcing expectations for two more Fed rate cuts this year. Corporate earnings continued to impress, with 85% of reporting S&P 500 companies beating estimates, led by strong performance in Tech and Energy sectors. Additionally, easing trade tensions with China, marked by more conciliatory rhetoric from Trump, boosted market confidence.
While an extended U.S. government shutdown created some uncertainty by delaying key economic data releases, including jobs and retail sales reports, investors largely overlooked these concerns. The stabilizing banking sector, following solid results from regional banks and regulatory reassurances, further supported market confidence. For this new week, earnings reports from five Mag 7 tech companies and the Fed's rate decision will be the key drivers to watch.
