October 2025 delivered a paradox for investors. U.S. equities surged—the Nasdaq gained 4.7% and the S&P 500 rose 2.3%—even as a persistent government shutdown left markets without official economic data. Investors were effectively flying blind, yet optimism prevailed.

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Two key factors have led to this resilience. First, the Federal Reserve cut rates by 25 basis points for the second consecutive meeting and announced plans to end its quantitative tightening (QT) program on December 1. The move was widely seen as a “green light” for risk assets, signaling the Fed’s shift toward supporting growth amid rising employment risks.

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Second, third-quarter earnings have come in stronger than expected, led by large-cap technology and AI-focused companies that continued to deliver robust margins and free cash flow. This combination of policy easing and solid corporate fundamentals outweighed uncertainty from Washington.

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With the potential reopening of the federal government, attention now shifts to a flood of delayed economic releases that could define the Fed’s final policy move of the year. The December FOMC meeting will hinge on whether upcoming inflation and labor data confirm the softening suggested by private indicators.

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• • If the delayed CPI and payrolls data show continued cooling, the Fed’s dovish pivot will be validated—supporting prospects for a December rate cut and a potential year-end market rally…did I say potential?!

• • Conversely, if inflation or labor strength re-emerges, the Fed may pause in December, challenging markets that have already priced in further easing.

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In short, October’s rally was built on confidence in a friendlier Fed and resilient earnings environment, but the sustainability of this momentum now depends on how quickly the data confirms (or contradicts) that optimism. We have also seen some increased volatility from the discussions around valuation levels, but we would be remiss if we didn’t encourage you to revisit the most recent What’s Trending? that discusses when higher valuations may be justifiable.

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While we may continue to see volatility in the markets as we approach the end of 2025, we want you to remember that our focus is on your Financial Peace of Mind. We will continue to monitor the US and global economic environment as well as the markets and take appropriate actions as warranted.

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For now, we want you to focus on preparing for the upcoming holiday season, and we look forward to seeing you again soon.