Market Update
The Federal Reserve (Fed) continued its new easing cycle in October, providing further support for the stock market's upward trend.
At its October meeting, the Fed lowered interest rates by another 0.25%. This was the second consecutive cut, following the cycle's first reduction in September. Fed Chair Powell made it clear that another rate cut at the December meeting is not guaranteed. The market's rally has been supported by this shift in Fed policy, as well as by solid third-quarter earnings reports.
Economically, the data remains mixed. While real Gross Domestic Product (GDP) growth showed a strong rebound in the second quarter, rising at a 3.8% annual rate after a first-quarter decline, other areas show cooling. The latest Consumer Price Index (CPI) report showed year-over-year inflation at 3.01%, remaining persistent. Furthermore, the labor market continues to cool, with seasonal job postings up only slightly despite a large increase in job seeker interest.
Despite these concerns, the equity markets continued their climb, marking their sixth straight month of gains. As we enter the final two months of the year, seasonal trends are favorable. Historically, the fourth quarter is the strongest three-month period for stock in the S&P 500 since 1950. While past performance does not guarantee future results, this historical tailwind, combined with the Fed's supportive stance, has investors optimistic for a strong finish to the year.
Source: LPL Research, FactSet, Bloomberg 09/30/25 (1950–current)
Disclosures: All indexes are unmanaged and cannot be invested into directly. Past performance is no guarantee of future results. The modern design of the S&P 500 Index was first launched in 1957. Performance before then incorporates the performance of its predecessor index, the S&P 90.
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Market Recap
The S&P 500, Nasdaq, and DJIA all saw positive performance in October 2025, each marking its sixth consecutive month of gains.
- The S&P 500 was up 2.27% for the month. This brings its YTD return to 16.3%.
- The Nasdaq Composite Index continued its strong performance, posting a gain of 4.7%. The YTD return is at 22.86%.
- The Dow Jones Industrial Average (DJIA) also saw its sixth straight month of gains, adding 2.51%. The YTD return is at 11.8%.
As always, if you have questions about how the economy may impact your investments, please don’t hesitate to reach out to us.
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Sources:
https://www.morningstar.com/indexes/spi/spx/performance
https://www.morningstar.com/indexes/dji/!dji/performance
https://www.morningstar.com/indexes/xnas/@cco/performance
https://www.jec.senate.gov/public/index.cfm/republicans/inflation-update
https://www.lpl.com/research/blog/can-october-seasonals-keep-the-melt-up-going.html