Market swings
The U.S. stock market experienced heightened volatility as investors grappled with renewed trade tensions between the U.S and China, alongside growing expectations for additional interest rate cuts by the Federal Reserve. Despite sharp intraday swings, the major indexes demonstrated resilience. The S&P 500 reached record highs in early October before plunging on October 10, when President Trump threatened a 100% tariff on Chinese imports in response to Beijing’s restrictions on rare earth exports(1). That day, the Dow Jones Industrial Average sank 879 points, while the tech-heavy Nasdaq dropped 3.56%. However, markets rebounded strongly on October 14, buoyed by robust third-quarter earnings from major financial institutions(2), which helped restore investor confidence.
Upcoming Federal Reserve meeting
Investors remain focused on where the Fed may be heading next. Futures markets imply a 97% to 98% chance of another rate cut at the October 28-29 meeting(3), even as Fed officials warn of increased downside risk to employment while inflation continues to run above the 2% target(4). The minutes from the Fed’s September meeting reveal broad agreement among policymakers for additional easing, with most projecting two more quarter‑point cuts by year’s end(4). But, the ongoing federal government shutdown, now in its third week, has injected uncertainty into that outlook by delaying critical data releases, including the September jobs report and Consumer Price Index(5,6). With that government data offline, the Fed and markets have had to lean more heavily on private‑sector indicators and anecdotal information(6,7). Although the Consumer Price Index was originally scheduled for release on October 15, the Bureau of Labor Statistics has confirmed it will now be published on October 24(7).
Geopolitical uncertainty and trade tensions
Global economic concerns and trade tensions remain at the forefront of market attention, with bond markets reflecting both expectations of Fed rate cuts and persistent inflation fears(8). Treasury yields have edged lower, while gold surged to record highs above $4,200 per ounce as investors sought safe-haven assets amid rising geopolitical uncertainty and anticipation of monetary easing(9). Meanwhile, oil prices fell to five-month lows on mounting concerns about a potential global supply surplus(10). European markets remained relatively stable, with the ECB holding rates steady and signaling confidence in its current policy stance(11).
Bottom line
Looking ahead, markets must contend with a mix of encouraging signals and unresolved risks. With the Federal Reserve heading into its late-October meeting without complete government data(5,6), investors will be watching closely for any shifts in policy guidance, the trajectory of trade negotiations ahead of potential Trump-Xi talks in South Korea(12), and whether the economy can sustain a soft landing into year-end. The resolution of the government shutdown, along with greater clarity on fiscal and trade policy, will play a critical role in determining market direction in the coming weeks.
(1) Source: BBC, https://www.bbc.com/news/articles/ce3x1elkxvvo
(2) Source: CNBC, https://www.cnbc.com/2025/10/15/bank-of-america-bac-earnings-q3-2025.html
(3) Source: CME Fed Watch Tool, https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html
(4) Source: CNBC, https://www.cnbc.com/2025/10/08/fed-minutes-september-2025.html
(5) Source: Forbes, https://www.forbes.com/sites/simonmoore/2025/10/13/october-interest-rate-cut-broadly-expected-from-fed/
(6) Source: ABC News, https://abcnews.go.com/Business/wireStory/government-shutdown-delays-release-critically-important-inflation-figures-126537866
(7) Source: Reuters, https://www.reuters.com/world/us/us-government-shutdown-how-it-affects-key-economic-data-publishing-2025-10-06/
(8) Source: Reuters, https://www.reuters.com/business/long-treasury-yields-stay-elevated-inflation-debt-pressures-blunt-fed-easing-2025-10-14/
(9) Source: Bloomberg News, https://www.bloomberg.com/news/articles/2025-10-14/gold-xauusd-trades-near-record-on-fed-rate-cut-sign-us-china-tensions
(10) Source: Bloomberg News, https://www.bloomberg.com/news/articles/2025-10-13/latest-oil-market-news-and-analysis-for-oct-14
(11) Source: Reuters, https://www.reuters.com/business/ecb-rate-level-robust-enough-manage-shocks-meeting-accounts-show-2025-10-09/
(12) Source: Bloomberg News, https://www.bloomberg.com/news/articles/2025-10-15/bessent-floats-longer-tariff-truce-for-china-rare-earth-delay