Market Update – November 3rd, 2025

Financial Markets

Another week of limited economic data came as the government shutdown officially reached the one-month mark, halting key releases such as PCE inflation and personal income data that typically arrive at the end of the month. Still, markets got a notable development from the Federal Reserve meeting, where the Fed cut rates for the second time this year by a widely expected 25 basis points.

With macro data on pause, earnings season took center stage. Results across mega-cap companies were generally positive, though performance varied by company. Accordingly, markets ended the month of October on a positive note, with the Nasdaq Composite up 2.24%, the S&P 500 rising 0.71%, and the Dow Jones Industrial Average gaining 0.75% last week.

Market News

October Federal Reserve Meeting

The Federal Reserve met last week and cut rates for the second time this year, lowering the federal funds rate by another 25 basis points to a range of 3.75%–4.00%. The Fed also announced plans to end quantitative tightening of its balance sheet on December 1st.

One notable surprise came during Chair Jerome Powell’s remarks, as he appeared less confident about another rate cut in December, which markets had previously viewed as a near certainty but now see as only a modestly likely scenario. The S&P 500 finished flat on Wednesday following the meeting, reflecting a muted reaction to both the October cut and the increased uncertainty around the Fed’s next move.

Magnificent 7 Earnings

Lacking macro data, investors focused on several major companies reporting last week, including Microsoft, Google, Meta, Apple, and Amazon. Overall, results generally met or exceeded expectations, but guidance around outlooks and technology-related capital expenditures largely dictated the sentiment around each company.

Microsoft

Microsoft beat earnings and revenue expectations for its fiscal first quarter, with its Azure cloud business growing 40% year over year. While demand for AI remains strong, the company noted it is investing heavily to expand capacity, leading to a forecast for higher spending growth this year. Shares fell 1.1% last week as investors reacted cautiously to the increased expenditures.

Google

Google reported better-than-expected results on both the top and bottom lines, marking its first quarter ever with revenue above $100 billion. Strong performance and a healthy increase in capital spending impressed analysts and reinforced Alphabet’s AI leadership. Shares rose 8.2% for the week.

Meta

Meta reported third-quarter sales that exceeded expectations but took a $15.93 billion one-time tax charge related to a federal deferred tax law change from the One Big Beautiful Bill Act. The company also raised its outlook for total expenses and capital expenditures next year. Analysts expressed concern about Meta’s heavy AI spending without a clear monetization path, leading the stock to fall 12.2% last week.

Apple

Apple’s fiscal fourth-quarter results beat expectations, and the company issued strong guidance for its December quarter, anticipating robust demand for the iPhone 17. Its services segment, which is Apple’s fastest-growing and most profitable business, rose 15% year over year. Shares gained 2.9% last week on the positive news.

Amazon

Amazon delivered third-quarter earnings that topped expectations, with revenue in its cloud unit accelerating 20.2%, ahead of forecasts of 18.1%. Stronger-than-expected cloud growth, a key focus for investors, drove optimism and sent the stock up 8.9% for the week.

These five companies represent over 25% of the S&P 500, making their results highly influential. A key takeaway from the week was the growing potential for AI monetization along with the risks of rising expenses and capital needs to build AI infrastructure.

Source: Morningstar

Reactions to earnings varied across the group, but year-to-date performance remains strong but fairly dispersed: Google leads, up 48%, followed by Microsoft, up nearly 23%, Amazon and Meta both up around 11%, and Apple up 8%.

Consumer Confidence

Consumer confidence was little changed in October, with the Conference Board’s index edging down slightly to 94.6 from 95.6 in September. Stronger views of current business and labor market conditions helped offset weaker expectations for the months ahead. Consumers’ outlook for future income, job availability, and business conditions softened, keeping the Expectations Index below the level that typically signals recession risk.

Inflation remained a concern, with one-year inflation expectations inching up to 5.9%, and just over half of respondents expecting interest rates to rise. Confidence was strongest among middle-aged and higher-income consumers, while younger and lower-income groups grew more cautious.

Spending intentions were mixed heading into the holiday season, with consumers planning to spend less overall and showing a stronger preference for deals and value-driven purchases. Overall, consumer sentiment remains stable but subdued.

Source: The Conference Board

Summary

Markets ended October on a positive note, even as the government shutdown delayed key economic data releases. The Federal Reserve cut rates by 25 basis points and signaled the end of balance sheet tightening, while mixed reactions to mega-cap earnings highlighted growing tension between AI-driven growth opportunities and rising capital expenditures. Google and Amazon led gains, rising more than 8% each on strong cloud and AI-driven results, while Meta fell sharply on spending concerns and Microsoft and Apple saw more modest moves. Consumer confidence remained steady but cautious, reflecting a more value-focused tone among consumers heading into the holiday season.

We appreciate your continued trust.

Thank you,

Joseph M. Maas,
CFA, CFP®, ChFC, CLU®, MSFS, CCIM, CVA, ABAR, CM&AA

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