Markets Finish Higher After Another Volatile Week of Trading

Markets Finish Higher After Another Volatile Week of Trading

Major U.S. and international equity indexes finished in positive territory on Friday, capping off another volatile week of trading. Global equities, measured by the MSCI All Country World Index (ACWI), rose 1.78%, while U.S. equities, represented by the S&P 500, advanced 1.93%. Market volatility was driven by several notable headlines, including renewed developments in U.S.–China trade relations and a sharp rise in oil prices following the U.S. announcement of sanctions against Russia’s two largest oil companies. The standout performer of the week was the small-cap segment, with the Russell 2000 climbing more than 2.5%.

Key Economic Data

The ongoing government shutdown has delayed several key economic data releases, including the jobs report that the Federal Reserve closely monitors to guide policy decisions. However, the Bureau of Labor Statistics recalled workers to release the September Consumer Price Index (CPI) report, as the data is needed to calculate next year’s cost-of-living adjustment (COLA) for more than 70 million Social Security recipients. Inflation came in softer than expected, with headline CPI rising 0.3% from the prior month versus expectations of 0.4%, while the core index, which excludes food and energy, increased 0.2% versus an expected 0.3%—its slowest pace in three months. On an annual basis, both measures rose 3%, with the headline index edging slightly higher and the core index moving modestly lower.

Purchasing Managers’ Indexes (PMIs)

An early reading of the purchasing managers’ indexes (PMIs) compiled by S&P Global indicated that business activity strengthened in October. The composite PMI, which combines manufacturing and services, rose to 54.8 from 53.9 in September, marking the 33rd consecutive month of expansion. The service sector continued to lead growth, reaching a three-month high of 55.2, while the manufacturing PMI edged higher to 52.2 from 52.0, signaling modest improvement in business conditions. However, optimism among manufacturers declined to its second-lowest level since June 2024, reflecting ongoing concerns over tariffs and policy uncertainty.

Earnings Season Update

Other notable market news: As earnings season approaches its midpoint, a handful of U.S. mega-cap technology stocks are expected to continue driving a disproportionate share of overall earnings growth. According to FactSet, analysts estimate that the group of companies known as the Magnificent Seven delivered average third-quarter earnings growth of 14.9%, compared with projected growth of 6.7% for the remaining 493 companies in the S&P 500.

Looking Ahead

For the week ahead, the upcoming Federal Reserve meeting will dominate investor attention, while several key economic data releases—including GDP growth, PCE inflation, and employment cost data—are likely to be delayed due to the ongoing government shutdown. In the absence of these indicators, markets will turn their focus to consumer confidence, housing prices, and regional Federal Reserve surveys for additional insight into the economy’s underlying momentum.

As Always

I’d like to leave you with the final line we’ve used since we started these commentaries back at the very height of market volatility in March 2020. Always remember that we create financial/investment plans not for the easy times, but to prepare for the tough ones.