Volatility returned to the markets in October after months of low volatility. Yet, the markets ended October on a high note. NVIDIA became the first company to reach a $5 billion market capitalization. This is larger than the combined value of its semiconductor competitors: Qualcomm, AMD, Arm Holdings, Broadcom, ASML, Lam Research, Intel, Micron Technology, and Taiwan Semiconductor.
Enough companies have reported their third-quarter earnings to give insight into how the overall market is performing. Revenue (the sale of products/services… i.e., how much people are spending) and earnings (a company’s profits) both came in with strong results. The Mag 7 (Apple, Amazon, Alphabet, Meta, Microsoft, NVIDIA, and Tesla) have regained prominence in the latter half of October.
Market volatility was introduced by President Trump’s public US-China tariff pressures. On October 10th, President Trump suggested an additional 100% tariff on all Chinese imports ahead of a scheduled US-China trade negotiation. Markets hedged their bets on a potential trade war between the #1 and #2 world economies. The market’s reaction was similar, but lessened, to Trump’s Liberation Day promise. As October closed out, the US-China trade negotiations turned out to be favorable to both sides, calming markets.
The global economic picture improved slightly compared to earlier estimates. The International Monetary Fund (IMF) revised 2025 and 2026 economic growth projections upward, with developed nations moving into modest territory and emerging markets further strengthening. Likewise, corporate managers have raised their expectations for near-term improvements.
The government shutdown has persisted since October 1st, likely to become the longest in history. The shutdown has so far interrupted non-essential governmental services. The US is the gold standard for gathering and disseminating economic data, which has ceased due to the shutdown. The one exception is September’s inflation number, as the quarter-end inflation is used for spending adjustments in 2026, such as Social Security COLAs and tax provisions. Inflation data has confirmed inflation is controlled around 3% (slightly less than projections), though still higher than the Federal Reserve’s target of 2%. Starting November 1st, more serious governmental support, such as Supplemental Nutrition Assistance Program (SNAP), which could have a more somber impact, forcing senators to come to an agreement.
The final major market mover was the Federal Reserve (Fed). The Fed cut rates by 0.25% in October, the second cut in the last two meetings. During the press conference, an announcement meant to temper an overzealous market had the opposite effect. Fed Chairman Powell suggested a rate cut in December is not likely in the cards, which ran counter to what the financial markets had priced in. The Fed’s comments gave something for investors to think about, but not enough to derail market highs.
Lastly, gold, which has been on a tear for much of 2025, has taken a breather. Gold, often regarded as an uncertainty hedge, marched towards all-time highs in mid-October, but retreated in the latter half of the month. Many have been left dumbfounded by gold’s meteoric rise so far this year. One has to revisit the 70s to see comparable returns.
October’s volatility may have been warranted as financial and other risks presented themselves early in the month. Yet, many of those fears were resolved by month’s end.
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