Weekend Update, October 27th, 2025
Don’t Call It a Comeback
Index, Sector, and Asset Performance
All three major U.S. indexes ended the week positive and at new ATH’s. The S&P 500 index rose +1.9% last week to a new closing high as September consumer price data came in below expected while companies including Intel (INTC) and International Business Machines (IBM) surpassed earnings expectations. The S&P 500 ended the week at 6,791. Last week’s gain brought the S&P 500 to +1.5% for October and +15% for the year.
Per Goldman Sachs 1-Week asset returns:
The energy and technology sectors led gains last week’s gains at +2.8%, followed by +2.6% and a +2.4% increase in industrials. In the S&P 500, Consumer discretionary and health care rose +1.9% each. Financials, real estate and communication services also added at least +1% each.
In hectic post earnings trading, International Business Machines (IBM) was among the top gainers in technology, climbing +9.3% as the company lifted its full-year revenue growth. Revenue is now anticipated to rise by more than +5% in 2025.
Intel’s (INTC) shares also gave the tech sector a lift, rising +3.4%. Intel turned a profit in the third quarter as revenue rose, thanks to a PC upgrade cycle and artificial intelligence boosting demand for computing power.
The energy sector’s advance came as oil futures finally rose on the week. Halliburton (HAL) was the sector’s top gainer, jumping +19%.
“Boring” sectors lagged with Consumer staples down -0.6% and utilities down -0.2%.
The “wall of worry” remains in place, with the AAII investment survey of the past week indicating the percentage of bulls only at 37%. The percentage of bears was higher at 43%. This data means 63% of “sophisticated” investors are either still neutral or bearish.
US 10-year Treasury yield made a new low then reversed back to over 4%.
Investment-grade bond spreads remain at 50 bps over Treasuries. High-yield bond spreads also remain well-behaved at 288 basis points.
Economic Indicators and Earnings Commentary
Data released last Friday showed US consumer prices rose less than expected in September, while core inflation ticked down, reinforcing expectations for an interest rate cut this week. The report, which had been delayed by the ongoing government shutdown, showed the consumer price index rose +0.3% month on month in September. Annually, inflation accelerated to +3% from August’s +2.9% but was below Wall Street’s 3.1% estimate. Core inflation slowed to 0.2% from 0.3% in August.
Atlanta Federal Reserve GDP Now estimate suggests the US economy is growing at a +3.9% rate in the third quarter, a continued acceleration from Q1 and Q2.
The Federal Government remains closed.
Government shutdowns historically have not been issues for equity markets. The last 50 years, there have been 21 shutdowns. 3 months afterwards, the S&P 500 was up +3% on average, with a 67% hit rate. After 12 months, the S&P 500 was up 90% of the time, with an average return of +12% for all 21 shutdowns.
The Federal Reserve is likely to cut interest rates in October and again in December. The US two-year Treasury note yield remains about 50 basis points below the federal funds rate.
The Q3 earnings reported so far have been strong, with 85% of companies beating expectations. It’s early in the season, but that 85% figure is the highest percentage since 2021 per JPMorgan. The average earnings surprise is +8%, with only 10% of companies missing expectations by more than a standard deviation. Financials have delivered 10pp beat, and investor attention is now focused on the major tech firms.
The Earnings reporting Tsunami is forthcoming. Earnings growth should decelerate relative to last quarter due to smaller currency tailwinds, higher tariff payments, and one-time charges that boosted year/year growth in 2Q. That said, Wall Street analysts increased their Q3 earnings estimate for the S&P 500 during the quarter for the first time since post Covid 2021.
3Q earnings season continues in earnest this week. 35% of S&P 500 companies will report results this week. Notable reporters include Visa (V), UnitedHealth Group (UNH), Microsoft (MSFT), Alphabet (GOOG, GOOGL), Meta Platforms (META), Caterpillar (CAT), Boeing (BA), Apple (AAPL), Amazon.com (AMZN), Eli Lilly (LLY), Mastercard (MA), Merck (MRK), Exxon Mobil (XOM), AbbVie (ABBV) and Chevron (CVX).
Commodities and Currencies
Oil and its products rallied back over $60/bbl last week.
The US dollar has been rallying, not falling for about 7 weeks and sits near 99.
Gold hit new ATHs at $4,300+/ounce and then collapsed back toward $4,000.
Bitcoin and other cryptos were strong last week with bitcoin trading back near $115,000.
Oak Harvest Weekly Stock Talk
Past performance is no guarantee of future results. Indexes are unmanaged and one cannot invest directly in an index. They do not reflect any fees, expenses or sales charges. The preceding discussion is for informational purposes only. Investing involves risk and no reference to any security listed above should be considered a buy or sell recommendation. Advisory services are provided through Oak Harvest Investment Services, LLC, a registered investment adviser.
