Weekly Recap:

by Michael Reinking, CFA & Eric Criscuolo

Published on 11/7/25

We hope everyone had a fun Halloween. In case you were wondering, the MAC Desk rolled out with Winston the Squishmallow, Toothless the Dragon, Mary Poppins (the original), Bert, the chimney sweep, a ship’s captain, and an Electricity Ninja. While much revelry was had domestically, it’s been a little less fun in the markets, despite gaining an hour of sleep back on Sunday.

Since hitting a record intraday high of 6920 just before Halloween, the S&P 500 has pulled back a bit over the past two weeks after failing to hold 6900. It then fell below its 20d moving average ~6750, putting support at the significant 50d ma in play this week, ominously around 6666. The index has not broken below it since early May.  

Like a pile of unsold 80's horror movie masks in a post-holiday Spirit Halloween store, this week was not particularly attractive for most asset classes. However, the good news is that equities came off their trick-or-treat sugar crash to finish Friday with some nice reversals and momentum into the weekend.

Some of the weakness was residual from the nothing-burgers that last week’s biggest events turned out to be, depriving markets of catalysts. Other than Halloween and a thrilling World Series Game 7, last week’s big event was President Trump and Chinese President Xi finally having their face-to-face meeting. The two essentially agreed to a one-year truce and ratified the agreements that were negotiated in the earlier part of the week. The Federal Reserve cut rates by 25bp and announced the end of its balance sheet run-off, but both were widely expected as well. Chair Powell, however, delivered Hawks a treat and Doves a trick when he said another rate cut in December was, “Not a foregone conclusion. Far from it.”  The prospect of more rate cuts has been a tailwind for equities, especially the ones on the frothy/risky side. While the Fed is still likely to cut, it took some of the wind out of upside momentum as yields moved higher. While the S&P 500 gained almost 1%, the equal-weight version and small caps fell 1-2%, highlighting that those headline gains were only seen by a portion of the market- mostly large cap Tech. In fact, it was one of the largest outperformances by the market-weight versus the equal-weight this year. This week, that reversed.

This week, we said goodbye to Daylight Savings. As of today there are 36 trading days left in 2025, by my calculations, and Black Friday is 15 trading days away. We also said goodbye, at least temporarily, to tech strength. AI deals and partnerships continue to spill out, but their expanding mass is starting to create gravitational forces that are pulling in more scrutiny than price upside. Questions around revenue circularity linger. More attention is being paid to the growing number of debt-financings to fund AI expansion, and in particular the off-balance sheet nature of them. Deutsche Bank was reported to be looking into ways to hedge their AI lending exposure, including shorting AI stocks and synthetic risk transfers. While that may just be standard operational prudence, the timing and optics are not ideal. A lot of ink was spilled on the news that Michael Burry’s Scion Capital was short not housing again, but Nvidia and Palantir.

AI partnerships and investments will continue to come at a brisk pace, but if stock prices become desensitized that would obviously be a problem for equities in general since the AI trade covers not only Tech but Energy, Utilities, and Industrials directly, and the other sectors tangentially. The XLK tech ETF has rolled over and is testing its 50d moving average. The good news on Friday was that it not only held but was taken all the way back above its opening level.

The sluggish action we saw last week continued at the start of this week, but it looked like equities were regrouping on Wednesday after the S&P held its 20d moving average and ended modestly higher, with small caps outperforming. The S&P closed off its highs, however, and Tech sold off into the close. The downside momentum resumed Thursday. We've noted the frothy areas of the market began to come under pressure prior to the recent tech weakness, and that pressure continued. As one example, a composite of quantum computer stocks is off substantially from its highs in mid-October.

At one point on Friday the S&P was down around ~3% this week, while the equal -weight was doing better, only down about 1%. Tech and the mega caps were a significant source of weakness. The ICE semiconductor Index, FANG+ Index and Mega Cap Growth ETFs were down over 4-6%. As we mentioned above, however, buyers stepped in to defend key levels. As we rounded noon, the climb higher began. Small and mid-caps outperformed, with a caveat for small caps. We’ve noted several times the discrepancy between the makeup of the S&P 600 and Russell 2000 small cap indexes, with profitless companies excluded from the 600. That difference showed up again this week with the 600 outperforming.  

Even before the turn, there were areas of strength, especially in the less growthy and / or historically safer plays that have had more middling performance YTD. Energy was the best performing sector, with natural gas plays leading the way. Defensively-oriented Healthcare and Consumer Staples were also higher. Managed care and healthcare services were solid this week. Staples’ outperformance versus Discretionary should be called out, given the growing concern around a K-shaped economy and unyielding pressure on lower-income cohorts. Utilities and Real Estate were flat to slightly lower before ending strongly on Friday. Insurance names stood out for Financials, providing the updraft on some solid earnings and reversion from earlier weakness.

The price action in crypto is a metric we’re watching more, as an indicator of risk appetite and liquidity. While the complex remains under pressure, some key stabilization signals emerged, like Bitcoin regaining $100k after crossing below it several times this week, including Friday. That was a leading indicator for the S&P’s turn higher later in the day.

Yields and politics are also headwinds. Powell’s dovish FOMC press conference last week triggered a back-up in rates. After the Fed blackout ended, multiple Fed officials have voiced their hesitation with lowering rates further at the next FOMC meeting, providing another push higher. Should the Supreme Court overturn the Trump tariffs, yields could move up substantially as the debt situation deteriorates, though that could then lead to rate cuts from the Fed if conditions materially deteriorate. Meanwhile the growing balance of the Treasury TGA account due to the shutdown is not helping liquidity, as is the shutdown overall. Not only is it pressuring government worker income but it’s hindering economic activity more and more, such as increasing flight delays. Speaking of government, the solid election results for Democrats on Tuesday are likely to reverberate as pundits begin to size up mid-term elections next year.       

Among the other themes this week was M&A, including an old-fashioned Merger Monday kicking things off. Several deals were announced, headlined by Kimberly Clark’s cash and stock deal for Kenvue for nearly $50 billion.  Instead of a trade war we have a bidding war between Pfizer and Novo Nordisk for Metsera. Charles Schwab is buying investment platform provider Forge. It was also reported that Softbank had approached chip maker Marvel earlier this year but the two sides couldn’t come to an agreement. 

To summarize, it was a messy week for equities, but key levels held and it ended on a strong note. There's a lot of cross-currents right now that are shifting the sea bed on a weekly basis. Maybe we could have just wrote that and called it day. But where's the fun in that?   

By recent standards there was some impactful private sector economic data this week. That data was somewhat conflicting but continues to paint a picture that was similar to what we saw when we were getting government data prior to the shutdown.

ISM Manufacturing came in below expectations at 48.7 down from 49.1 last month. The underlying metrics weren’t terrible with an improvement in new orders and employment while prices moderated. However, the comments section is pretty gloomy. Susan Spence, Chair of the ISM Manufacturing Business Survey Committee noted, “For every positive comment about new orders, there were 1.7 comments expressing concern about near-term demand, driven primarily by tariff costs and uncertainty.”

ISM Services painted a better picture coming in at 52.4, ahead of expectations, up from 50.8. The underlying metrics were solid with a big jump in new orders and business activity but there were big declines in imports and the backlog of orders. Employment remained in contraction for the 5th consecutive month but did tick up slightly. Prices increases also ticked higher. The comment section also had a much less gloomy tone as compared to the manufacturing sector. 

The week’s employment data was also somewhat conflicting. The ADP Employment Report showed the first uptick in hiring since July with 42k jobs added to the economy. Large companies drove all of the hiring with declines in both small and medium sized businesses.  Jobs were added to both goods producing industries (+9k) and services (+33k) but there were not broad-based gains with lots of +/- across industries - largest increases (Trade/Trans/Utilities, Education) Losses (Information, Professional/Business services). The pay data remained flat on a m/m basis. This wasn’t a perfect report by any stretch, but the modest improvement suggested that the environment had not deteriorated significantly.. 

That optimism was short lived as the Challenger Job Cuts were released in the wee hours of the morning on Thursday jumping to ~153k from 54k last month. That was the highest reading since March, and highest October reading in 22 years. The commentary was also not particularly comforting: “Some industries are correcting after the hiring boom of the pandemic, but this comes as AI adoption, softening consumer and corporate spending, and rising costs drive belt-tightening and hiring freezes. Those laid off now are finding it harder to quickly secure new roles, which could further loosen the labor market”.  The biggest increases were in warehousing, particularly interesting given seasonality, and technology at ~48k and ~33k, up from 1k and 5.6k last month.

The ongoing government shutdown is starting to weigh on consumer sentiment highlighted by today's University of Michigan which hit a new low and NY Fed's consumer sentiment surveys. Inflation expectations within the two surveys remained contained.

One of the big stories from last week was the divided Fed though on Monday, Mary Daly took exception with that description saying, “It is not a more divided Fed than before, I wouldn't even use the word "divided". We may be splitting hairs in the description but there are clearly two different schools of thought. On Friday we started to hear from the hawkish contingent but to start the week the doves struck back. Christopher Waller was the first out of the gate saying given the risks to the labor market he still supports a December cut. Stephen Miran continued to be an outlier in his level of dovishness once again laying out his case for a series of 50bps cuts. Austin Goolsbee, who has been a long-time dove actually sounded slightly hawkish. He said he was undecided about December wanting to see more data but suggested he was more concerned about inflation than the labor market right now. At a high level there are some officials that sit squarely in the cut/hold camp but it seems like the bulk are maintaining an open mind but want to proceed with some caution.

There has been some volatility in Treasury markets this week. The Fed commentary didn’t have too much of an impact nor did the Treasury Refunding Statement which was in line with expectations. From the statement, “Treasury believes its current auction sizes leave it well positioned to address potential changes to the fiscal outlook and to the size and composition of the SOMA portfolio. Based on current projected borrowing needs, Treasury anticipates maintaining nominal coupon and FRN auction sizes for at least the next several quarters”.

The economic data drove the volatility yields moved sharply higher after the ADP/ISM Services but that completely reversed after the Challenger report. On the margin the SCOTUS tariff headlines may have added to the steepening of the curve with the prospect of losing that revenue. The USD index ended the week a touch lower pulling back after testing its declining 200d ma for the first time since breaking below that level in March.   

Next week is seting up to be a somewhat quiet week with earnings hitting a lull before retail earnings start to flow in. The new ADP weekly jobs report and the NFIB Small Business index are the only major private sector economic data. China economic data will get some attention including inflation over the weekend and retail sales/industrial production at the end of the week. 3/10/30yr Treasury auctions could get some attention as well. A SCOTUS decision on the tariffs could come at any time.  According to SCOTUSblog, "there is no way of knowing when that will be." Maybe most importantly, Veteran's Day is also next week. To all the Veterans, Thank You for your service. Have a great weekend!

By submitting this form you hereby expressly grant permission to use the information included thereunder to contact you for the purposes of sending periodic updates about ICE and/or its affiliates. Certain indices mentioned above are administered by ICE Data Indices, LLC.

Your contact information will not be used for any purpose other than that for which your consent has been given. To learn more about our privacy policy, please click here.

© 2024 Intercontinental Exchange, Inc.  All rights reserved. Intercontinental Exchange and ICE are trademarks of Intercontinental Exchange, Inc. or its affiliates. For more information regarding registered trademarks, limitations, restrictions, and other important information, please visit intercontinentalexchange.com/terms-of-use.