Market Recap - Wednesday, October 29, 2025
Tech Outperforms Again Amid AI Optimism and Earnings Buzz
Stocks ended mixed today as investors digested the Fed’s rate decision and a wave of big earnings. The S&P 500 finished flat, the Dow slipped 0.16%, and the Russell 2000 fell 0.87%. The Nasdaq managed to gain 0.55%, continuing its recent outperformance driven by AI enthusiasm and tech earnings optimism. It was another day of weak market breadth, with big-cap tech leading while many other areas lagged behind.
As expected, the Fed cut interest rates by 25 basis points and announced plans to end its balance sheet reduction (QT) program by December 1. While the rate cut was fully priced in, Fed Chair Powell delivered some unexpectedly hawkish remarks, cautioning that another cut in December is “far from a foregone conclusion.” That sent Treasury yields higher and kept investors on edge. The dollar rose, gold bounced back above $2,000/oz, and Bitcoin dropped over 2%. Oil prices were up slightly, while economic data remained light — pending home sales came in flat, missing expectations.
Tech continued to dominate the headlines. Nvidia extended its gains from Tuesday’s GTC conference and reached a $5T market cap, boosted by news that former President Trump plans to discuss its Blackwell chips in a meeting with China’s Xi. That meeting, along with more earnings from mega-cap tech names, is a key focus for Thursday. Elsewhere, Teradyne, Seagate, and Bloom Energy all reported strong results, with management citing robust AI-driven demand in data centers and semiconductor testing. Caterpillar also beat estimates, pointing to power generation demand tied to cloud and AI infrastructure.
Outside of tech, gains were seen in names like Centene, Flowserve, Verizon, Fortive, and Joby Aviation. However, several companies sold off sharply after disappointing results or guidance, including Fiserv, Varonis, Stride, and Avantor. Some consumer names like Enphase, Etsy, and Hormel also dropped on concerns about margin pressure and weakening demand.
Meanwhile, in geopolitics, positive developments around US-China trade added to the cautiously optimistic tone. Trump said he expects to reduce fentanyl-related tariffs and confirmed China has resumed purchases of US soybeans, a potential sign of progress ahead of Thursday’s Trump-Xi meeting. The administration also hinted at potential export discussions around Nvidia’s Blackwell chips.
Here’s Our Take:
The Fed gave markets what they wanted — a rate cut and an end date for QT — but Powell’s hawkish tone stole the spotlight. His warning that a December cut isn’t guaranteed sent yields higher and reminded investors that the path to easier monetary policy won’t be smooth. Markets are now pricing in a much lower probability of a follow-up cut, and that’s weighing on sentiment outside of the tech sector.
At the same time, tech is keeping the broader market afloat. Between Nvidia’s AI momentum, upbeat earnings across semis and software, and renewed US-China engagement, optimism in this space continues to build. But the rest of the market remains fragile. Weak breadth, soft housing data, and earnings misses in consumer and financial names are signs that not everything is rosy. For now, investors remain focused on the AI-driven growth story and Thursday’s key geopolitical meeting, but the disconnect between mega-cap strength and underlying economic headwinds is getting harder to ignore.
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