The S&P 500 has now posted six consecutive monthly gains, while the NASDAQ has extended its winning streak to seven. Both indices have recorded 36 all-time closing highs year-to-date. NASDAQ recorded strong gains in October, supported by robust earnings from major technology companies and surging interest in artificial intelligence. In the final week of the month, Nvidia became the first company to reach a $5 trillion market capitalization, while Apple and Microsoft each surpassed the $4 trillion mark. Alphabet, Amazon, Meta and Tesla also posted solid quarterly results, contributing to a 4.7% monthly gain in the tech-heavy NASDAQ. Amazon led market gains on the last trading day of the month, rallying 9.6% to a record high on stronger-than expected AI-related revenue growth and expanded data-center investment plans. The “Magnificent Seven” stocks, which now comprise roughly 38% of the S&P 500’s market weight, were the primary drivers of October’s 2.3% S&P500 gain. Just five stocks (Alphabet, Nvidia, Apple, Amazon, and Broadcom) generated more than 100% of the monthly return with nearly 60% of S&P 500 constituents declining in October. The equal-weight S&P 500 ended lower for the month, trailing by 3.2%. Overall, market sentiment remained risk-on in October, fueled by expectations of a Federal Reserve rate cut and optimism around a potential U.S.-China trade agreement.
International equities (MSCI ACWI Ex-US Index) also had a strong month, returning over 3.6% for September, bringing the year-to-date returns to almost 30% for 2025. Emerging Markets (MSCI Emerging Markets) also had another impressive month, returning over 3.9% for the month of September, bringing their 2025 return almost to 32%. As the global earnings growth driver is becoming increasingly reliant on technology companies, these companies are found more so in the U.S. and Emerging Markets. Other than earnings growth, the U.S. Dollar continues to be one of the biggest drivers in cross-asset performance (still down over -8% for the year), boosting international equity returns. Another element to consider on the U.S. dollar, it has been down amidst a global risk-on sentiment surge. While not apparent yet, we will be watching to see if the U.S. dollar will receive a risk-off bid if markets eventually do go through some volatility.
The Federal Reserve implemented its second consecutive rate cut on October 29th, lowering the target range for the federal funds rate to 3.75%–4.00%. At the longer end of the yield curve, the 10-year Treasury yield ranged between 4.18% early in the month and 3.97% mid-month – its first close below 4% since April 2025. The 10-year yield ended in October at 4.11%, down from 4.16% at the end of September. The Bloomberg Aggregate Bond Index gained 0.6% for the month and 6.8% for 2025. When looking at the relationship between starting yields and subsequent returns in core fixed income, starting yields tell investors a great deal about what their return could be if they hold the bond to maturity. Almost 90% of the variability in total return can be explained by the starting yield alone. Even though the reset higher in yields has created a challenging environment for bonds over the last few years, it has greatly improved the total return potential for returns going forward. Investors with longer investing horizons should consider the higher-than-average yields that bonds generally offer as the Federal Reserve has started to cut rates again.
Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training.
