Market Recap - Tuesday, October 28, 2025
Stocks Inch Higher as Markets Await Fed, Big Tech Earnings
Stocks finished mostly higher on Tuesday, though they pulled back a bit toward the close. The Nasdaq led gains, boosted by a strong performance from NVIDIA after a wave of AI announcements at its developer conference. The S&P 500 and Dow also posted modest advances, while small-caps lagged, with the Russell 2000 ending in the red. Market breadth was weak overall, with fewer stocks participating in the rally.
Gains were concentrated in large-cap tech and select industries like software, managed care, logistics (UPS), and nuclear energy. Standouts included Cameco (+23%) on a U.S. nuclear partnership and Nokia (+23%) following a $1B equity investment from NVIDIA. On the flip side, several areas struggled, including cruise lines, airlines, semicap equipment, energy, utilities, chemicals, and regional banks. Most-shorted names also underperformed, suggesting some risk-off positioning under the surface.
Treasury yields dipped slightly, and the dollar edged lower. Gold continued its slide, falling another 0.9%, and oil prices dropped nearly 2%. Bitcoin also slipped 1%. The 7-year Treasury auction saw muted demand, slightly trailing expectations.
What Moved Markets Today
Fed in Focus: Investors are looking ahead to Wednesday’s FOMC meeting, where the Fed is widely expected to cut rates by 25 basis points. More importantly, the market is focused on whether the Fed will also announce an end to Quantitative Tightening (QT).
Big Tech Earnings on Deck: Mega-cap tech earnings kick off in full force this week, with Microsoft, Alphabet, and Meta all set to report. Microsoft was up nearly 2% after updating its partnership with OpenAI, now holding a 27% stake worth ~$135B. AI-related news and partnerships remain a strong market tailwind.
Trade Developments: Markets found support from optimism around U.S.–China trade relations ahead of a scheduled Trump–Xi meeting later this week. Reports suggest the U.S. could ease fentanyl-related tariffs in exchange for China’s cooperation on precursor export restrictions.
Economic Data: October consumer confidence dipped slightly but remained resilient, while the Richmond Fed manufacturing index improved from prior months. August home prices showed modest gains, and ADP plans to provide weekly job data going forward, which may help sharpen the labor market picture.
Earnings in the Spotlight: Over 36% of S&P 500 companies have now reported Q3 results. Notable winners today included UPS (+8%), Wayfair (+23%), Regeneron (+12%), Celestica (+8%), and NVIDIA (+5%). Among the laggards were Royal Caribbean (-8.5%), VF Corp (-12%), Waste Management (-4.5%), and Rambus (-8.7%).
Here’s Our Take:
Markets remain on a solid footing, with major indexes extending gains thanks to ongoing optimism around AI, easing trade tensions, and expectations of a Fed rate cut. However, under the surface, the rally is increasingly driven by a narrow group of large-cap tech stocks — particularly those tied to AI momentum and strategic M&A activity. That makes the upcoming Big Tech earnings even more important for sustaining the bullish narrative.
At the same time, weak breadth, underperformance in small caps and cyclicals, and a rising number of layoff announcements suggest that not all areas of the market are benefitting equally. Investors are rotating into perceived winners — AI, software, logistics — while avoiding areas with margin or macro pressure like energy, travel, and housing. With QT possibly coming to an end and corporate buybacks picking up, liquidity conditions could become more supportive into year-end, but the market will need follow-through from earnings and the Fed to keep climbing. Caution is warranted, but the path of least resistance still seems upward for now.
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