DFG Navigator Archives | October 2025

Market Update: October 17, 2025

In today's complex financial landscape, staying informed is key to making sound investment decisions and creating a secure financial future. Our job at DFG is to help our clients navigate the changing financial landscape within the context of their personal financial plan in a way that brings them confidence, comfort, and security. Toward this goal, below is the latest Market Update issued by Daken Vanderburg, CFA, the Chief Investment Officer of MassMutual Wealth Management, which provides commentary on the current state of the economy and explores the impact of tariffs on the markets.As always, the Davis Financial Group Team wants to hear from you – please share your thoughts, questions, and ideas with us at info@davisfinancialgroup.com or give us a call at (413) 584-3098.CRN202803-8317719

Your Capital Markets Snapshot: Inflation Cools as Markets Reach Record Highs

Major U.S. equity indices hit all-time highs as the current bull market celebrated its third anniversary since the October 2022 bottom. The CPI report brought softer-than-expected inflation data, which supported expectations for a Federal Reserve rate cut at the upcoming meeting and reinforced a supportive backdrop for risk assets. Earnings season continued, with most reporting S&P 500 companies beating estimates and looks poised to mark the ninth consecutive quarter of earnings growth. Market breadth improved across US large and small caps, with most stocks trading above their 200-day moving averages, suggesting broader participation as the market rally continues. Crude oil prices rebounded sharply after recent declines, while gold saw its first weekly setback in over two months. The government shutdown continues, delaying most economic releases except for the CPI report. Despite mid-week volatility and ongoing trade tensions, market sentiment remained bullish. Potential for higher shot-term volatility exists with notable upcoming events such as tech earnings, the Trump/Xi trade meeting, and this week’s FOMC decision. Overall, the foundation of the bull market appears solid, with resilient earnings and supportive monetary policy driving optimism laying the groundwork for continued gains into 2026.

Your Capital Markets Snapshot: Trade Tensions Rise as Gold Hits Record Highs

The U.S. government shutdown entered its second week and has become the fourth longest on record with low expectations of a quick resolution. Despite this, markets chopped sideways most of the week until experiencing a selloff on Friday, following President Trump’s announcing the potential for higher tariffs on Chinese imports. The S&P 500, NASDAQ, and Dow Jones all posted weekly losses, breaking a multi-week rally. Despite mounting disruptions from the shutdown, markets appear focused on AI sector headlines, expectations of falling interest rates in months ahead, and trade policy developments. A bright spot in the volatility, gold continued to surge as its price broke above $4,000 per ounce, reflecting potential longer-term fiscal concerns and safe-haven demand. The Federal Reserve released meeting minutes reaffirming expectations for further rate cuts, even as economic data releases are delayed by the shutdown. It appears the Federal Reserve may be “operating in the dark” as labor market data is suspended, but the Bureau of Labor Statistics plans to pull in some furloughed workers to release the October CPI on October 24 before suspending further data. Looking ahead, Q3 earnings season is set to begin, with expectations for continued growth in corporate profits.

Your Capital Markets Snapshot: Shutdown Begins as Markets Stay Resilient

Beginning October 1, the U.S. government entered a shutdown, halting nonessential operations and delaying key economic data releases (including jobs and inflation reports). Leading up to this, economic growth has bounced back strongly from the negative Q1 result, driven by resilient consumer spending and record investments in artificial intelligence. The labor market has showed some signs of softening, with hiring slowing and Number of unemployed workers exceeding the number of open positions for the first time since 2021. Though, layoffs remain limited outside the government sector. The Federal Reserve recently resumed interest rate cuts and expectations are for another cut in October, in response to weaker labor indicators and continuing its latest decision-making amid data uncertainty. Equity markets remained resilient, with the S&P 500 reaching fresh all-time highs. AI innovation and the prospect of lower rates are fueling recent market strength, while historical precedent suggests shutdowns have minimal long-term impact on equities. Alternative assets like Bitcoin and gold rallied, while oil prices fell sharply due to oversupply concerns. Volatility ticked up modestly, but remained well below year-to-date highs, and earnings expectations for the upcoming season remained robust.

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