The equity rally that has dominated much of 2025 showed resilience in the week ending Oct. 31: major U.S. indices finished the week modestly higher (S&P 500 and Nasdaq advancing while the Dow was essentially flat on Friday), leaving the S&P about +16% year-to-date as investors balance strong corporate earnings against macro risks.
The Federal Open Market Committee met Oct. 29 and resumed their easing cycle with a 25-basis point cut. Chair Powell’s press conference emphasized that further cuts are data dependent and not guaranteed at specific upcoming meetings. His careful wording has left markets recalibrating the timing and scope of future easing. After the Fed meeting, shorter-term easing expectations were trimmed and benchmark yields moved higher: the 10-year Treasury climbed back above 4% late in the week as traders pared bets on further cuts this year. This sell-off erased much of October’s earlier gains in Treasuries and pushed price sensitivity in duration-heavy portfolios higher.
A highly anticipated meeting between President Trump and his Chinese counterpart President Xi delivered an easing in the trade tensions that have surged between the two superpowers this year. Headlines suggest that the U.S. will extend a pause on its reciprocal tariffs on China for an additional year and halve the 20% fentanyl-related tariff it has imposed on China. China meanwhile has committed to pausing restrictions on raw-earth mineral exports to the U.S. and has promised to restart soybean purchases from the struggling U.S. farm sector. Both sides agreed to a stand down on port fees and reciprocal trade investigations.
A central theme for investors right now is the ongoing federal government shutdown which began Oct. 1, and the resulting suspension of many official data releases. The Bureau of Labor Statistics has put routine updates on hold while the shutdown continues, and the disruption is already affecting services (notably air-traffic-control staffing and broader frontline operations) and the timely flow of CPI and employment information that policymakers and markets rely on. Officials have at times recalled staff to handle a handful of critical releases, but the uncertainty around cadence and completeness of official data persists.
October closed with equities up on the year but with heightened sensitivity to central-bank communication and government operational risk. The continuing shutdown is an active market and policy risk because it interferes with the very data the Fed and markets need; until that resolves, expect heightened dispersion across sectors and more reliance on private-sector data and company-level fundamentals.
2025 The Long View | First Merchants Bank
| Index | YTD Total Returns |
|---|---|
| S&P 500 Index | 17.52% |
| Dow Jones Industrial Average | 14.34% |
| NASDAQ Index | 23.50% |
| S&P 400 Mid Cap Index | 5.27% |
| S&P 600 Small Cap Index | 3.33% |
| Russell 2000 Small Cap Index | 12.39% |
| MSCI All Country World ex-USA | 29.22% |
| Bloomberg Barclays US Aggregate (TR) | 6.80% |
Returns are through | 10/31/2025
