Anna's Markets Recap

_{Just facts, you think for yourself}

Saturday, 5:07 AM

October 25, 2025

Good morning news friend! Here is a quick recap of what happened in the markets this week. 📰🌟

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What Moved Markets Last Week

U.S. equities navigated a paradoxical week, with major indices pushing toward all-time highs even as economic data signaled a clear slowdown. The market's behavior was not driven by economic optimism but by a near-certain conviction that the Federal Reserve will cut rates in response to weakening conditions.

The week's pivotal event was the delayed September Consumer Price Index (CPI) report, released on Friday, October 24. Headline CPI came in at 3.0% year-over-year (below the 3.1% forecast), and Core CPI also slowed to 3.0% (below its 3.1% consensus). This softer-than-expected data immediately cemented market conviction—with CME FedWatch probabilities nearing 99%—for a 25-basis-point rate cut at the upcoming FOMC meeting.

In response, the 10-year Treasury yield fell, closing the week at 4.02%, reflecting rising rate cut expectations. This data, however, was set against a backdrop of consumer strain. The final University of Michigan Consumer Sentiment index for October fell to 53.6, with 45% of consumers stating that high prices are eroding their personal finances.

This dynamic—a slowing economy solidifying a dovish Fed pivot—fueled a "risk-on" rally in technology while simultaneously boosting traditional "risk-off" assets. The market is not betting on a strong economy; it is betting on Fed liquidity.

Commodities clearly reflected the market's contradictory signals. Spot gold surged early in the week, setting a new all-time high near $4,380 per ounce before pulling back. This move, concurrent with the equity rally, was driven by a flight-to-safety trade rooted in economic anxiety and the anticipation of lower interest rates, which decreases the opportunity cost of holding the non-yielding asset. Meanwhile, oil prices remained capped by uncertainty over global demand.

Tech and Growth

The technology sector was a tale of two markets: forward-looking AI narratives propelled some stocks, while quarterly earnings revealed the market's punishing demand for flawless execution.

AI infrastructure and software leaders surged. Salesforce (CRM) soared on Monday, October 20, after unveiling its "Agentforce 360" platform and a bold forecast of $60 billion in revenue by fiscal 2030, driven by AI. NVIDIA (NVDA) rallied early in the week on news of a partnership to invest up to $100 billion in OpenAI, which will directly fuel GPU sales. Apple (AAPL) also set a new all-time high of $262.24 on Monday, driven by strong initial sales reports for the new iPhone 17.

Earnings season, however, provided a reality check. Netflix (NFLX) reported on Tuesday, October 21. While revenue met expectations, a $619 million one-time tax charge in Brazil caused a significant EPS miss ($5.87 vs. $6.89 consensus). The market reacted harshly, sending the stock down over 10% in the following sessions, proving that for high-multiple stocks, any "noisy" quarter is severely punished.

Conversely, Tesla (TSLA) demonstrated the power of narrative. Reporting on Wednesday, October 22, the company missed EPS consensus ($0.50 vs. $0.55) and reported automotive gross margins of 14.7%, confirming fears of compression. After an initial after-hours drop, the stock rallied 2.2% on Thursday as CEO Elon Musk successfully pivoted the investor conversation away from current margins and toward the long-term AI, Optimus robot, and Robotaxi roadmap.

Other tech giants like Microsoft, Amazon, Meta, and Alphabet traded in tighter ranges as investors await their reports next week.

Banks and Financials

Financials remained resilient but face a complex "rate cut paradox." The very catalyst driving the market higher—impending rate cuts—signals a slowing economy, which implies lower loan demand and compressed Net Interest Margins (NIMs) for banks.

Despite this, JPMorgan Chase (JPM) showed strength, trading near $300.50, and was further bolstered by news this week that it will begin accepting Bitcoin and Ether as collateral by year-end. Payment processors Visa (V) and Mastercard (MA) were relatively quiet as they entered their quiet periods ahead of earnings, with their performance tied directly to the faltering consumer spending volumes.

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Consumer Goods and Healthcare

Defensive sectors provided a mixed, but generally positive, picture. Consumer staples demonstrated their resilience. Procter & Gamble (PG) reported on Friday, October 24, beating analyst expectations with a core EPS of $1.99 versus the $1.90 estimate. The company maintained its full-year guidance despite headwinds, and the stock rose 2.5% in pre-market trading. Reflecting the sector's strength, Walmart (WMT) also touched a new all-time high of $105.31 during the week.

In healthcare, innovation and valuation drove performance. On Monday, October 20, AbbVie (ABBV) announced that its drug Rinvoq demonstrated superiority over Humira in a key study. Elsewhere, UnitedHealth Group (UNH), which had been down 37% over the past year, saw a rebound from its yearly lows as its low valuation appeared to attract investors.

Energy and Industrials

Sectors tied closely to economic activity and commodity prices faced headwinds amid growing concerns of a slowdown. Energy stocks were laggards, with producers like Exxon Mobil (XOM) trading in a tight range as geopolitical factors and demand concerns kept Brent crude volatile near $61 per barrel.

Industrial bellwethers reflected specific weaknesses. Home Depot (HD) continued to underperform, trading below its 50-day simple moving average. The stock's decline is a direct reflection of the U.S. housing market slowdown, which has caused consumers to defer large projects. An SEC filing on October 20 revealed a significant institutional sale of over $11 million in HD stock, signaling waning confidence.

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Baked with love,

Anna Eisenberg ❤️