Market Update – October 13, 2025

Financial Markets

Another week of limited economic data due to the federal government shutdown left markets sensitive to headline risk. Friday’s sell-off highlighted this fragility, as renewed trade tensions between the U.S. and China prompted a sharp decline in equities. By the close on October 10th, the S&P 500 had fallen 2.4%, the Nasdaq Composite dropped 2.5%, and the Dow Jones Industrial Average declined 2.7% for the week.

Market News

Friday Sell-Off

Markets sold off sharply on Friday, driven by heightened trade tensions between the U.S. and China. President Trump threatened a “massive increase in tariffs” on Chinese imports after Beijing imposed new export controls on rare earth minerals, where China controls roughly 70% of global supply.

Source: CNBC, 10/10/25

The President also suggested potentially cancelling his upcoming meeting with President Xi Jinping, adding to market worries. Given the critical role of rare earths in sectors such as autos, defense, and semiconductors, as well as the importance of the broader U.S.-China trade relationship, the escalation triggered a broad risk-off reaction, particularly in tech-heavy indexes.

However, much of Friday’s losses were offset Monday morning after President Trump reassured investors over the weekend on social media.

Consumer Sentiment

The University of Michigan’s Consumer Sentiment Index was nearly flat in October, showing little change from the prior month and remaining 22% below year-ago levels. The report reflected improvements in current personal finances and year-ahead business conditions, offset by declines in expectations for future personal finances and weaker buying conditions for durable goods.

There was also little evidence in the survey that the ongoing federal government shutdown has affected consumers’ views of the economy. Overall, sentiment remained subdued, suggesting that consumers are still cautious despite improving from late spring weakness.

Source: The University of Michigan

Gold Rally

Gold futures hit new all-time highs last week, continuing a unique trend observed this year: gold has been rallying alongside equities. Traditionally viewed as a hedge against market volatility, gold often gains when stocks are under pressure. This year, however, both equities and gold have trended higher together, reflecting stable macro conditions and investor appetite for multiple asset classes.

Despite the simultaneous gains, gold has still maintained its hedging qualities on a month-to-month basis. In several months, when the S&P 500 posted negative returns, gold was positive—and vice versa—demonstrating its continued low correlation with equities and its effectiveness as a risk management tool.

The recent gold rally has also been driven by heightened geopolitical risks, including conflicts, trade tensions, and tariffs. With both gold and equities recently reaching new highs, it will be interesting to observe how the two markets interact in the coming months, particularly amid evolving economic and geopolitical developments.

Source: Morningstar

Morgan Stanley Expands Crypto Access to Clients. Morgan Stanley announced last week that its financial advisors can now offer cryptocurrency investments to all clients, lifting previous restrictions that limited access to those with over $1.5 million in assets and an aggressive risk tolerance. While the firm will continue to monitor client accounts to ensure portfolios remain appropriately diversified and suitable for client objectives, the move marks a notable shift toward broader integration of digital assets within traditional wealth management.

This development underscores a broader industry trend of greater availability and regulatory clarity surrounding alternative assets like crypto. With these tailwinds in place, it’s no surprise that Bitcoin has continued its rally this year, reflecting investor confidence in the asset class.

Q3 Earnings

The third-quarter earnings season informally kicks off this week, with expectations calling for modest year-over-year growth. Zacks projects S&P 500 earnings to rise 5.5% on 6.2% revenue growth, implying a slight margin contraction. Other consensus estimates are somewhat more optimistic, calling for roughly 8% earnings growth.

With limited economic data available due to the federal shutdown, corporate results will serve as one of the clearest windows into the health of the domestic economy. The coming week will be dominated by reports from major banks including JPMorgan Chase, Wells Fargo, Goldman Sachs, Citigroup, Bank of America, and Morgan Stanley, as well as a few names outside the sector such as Johnson & Johnson and Taiwan Semiconductor.

If companies can deliver strong results and guidance, earnings could provide the catalyst needed for the S&P 500 to break above 7,000. However, disappointments may have the opposite effect, testing the market’s momentum.

Source: Zacks Investment Research

Summary

Markets ended the week lower amid limited economic data and heightened sensitivity to headline risk. A sharp Friday sell-off, driven by renewed U.S.–China trade tensions, underscored the market’s fragility, though sentiment recovered slightly after weekend reassurances from President Trump. Investors also turned their attention to the start of Q3 earnings season, gold’s continued rally, sluggish consumer sentiment, and expanding crypto access among major financial institutions.

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Thank you,

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

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