Last week, major banks reported earnings that beat Wall Street expectations, with profits boosted by a pickup in deal activity, strong trading performance, and a steepening yield curve.
Despite noise from the government shutdown, China tariffs, and renewed concerns over regional bank credit stability, corporate earnings are taking center stage and markets are responding positively.
Zions Bancorp disclosed a $50 million loan charge-off, while Western Alliance Bancorp announced exposure to the same borrowers. Credit issues are always of high concern. Although markets initially reacted, the consensus is that these are isolated events. Keeping a thumb on the pulse is important as credit concerns can roil both stock and bond markets. For now, let us keep a close watch.
Weekly Market Performance Recap
Markets reversed the previous week’s decline:
- Dow Jones Industrial Average: +1.70%
- S&P 500: +1.86%
- Nasdaq Composite: +2.24%
- Russell 2000: +2.44%
- Foreign Stocks: +2.49%
- Emerging Markets: +4.44%
Bond yields edged lower, with the 10-year U.S. Treasury yield finishing the week at 4.011%, briefly dipping below the key 4% mark.
Are Interest Rates Heading Lower?
The Federal Reserve is set to meet October 28–29 and is once again expected to lower interest rates. The Fed will likely point to the softening labor market as justification.
It’s worth noting that the two most significant non-COVID stock market downturns—2000–2002 and 2007–2009—were both preceded by Fed rate hikes. Even then-Fed Chair Ben Bernanke insisted the banking crisis would be “contained.” Well, we know how that turned out.
Today, with headlines ranging from tariffs to AI to labor stagnation, it’s tough to plant a flag firmly in either the bullish or bearish camp.
Labor Market & AI’s Role in Hiring Slowdown
Regarding job creation, just how long can the labor market remain stuck in neutral? Unfortunately, there’s no definitive answer. Companies across all industries, including Retirement Refined, are investing time in understanding and adopting Artificial Intelligence.
The promises of AI, including increased efficiency, effortless automation, and significant cost savings, are undoubtedly influencing hiring decisions. As adoption increases, expect traditional hiring trends to shift even further.
Corporate Earnings in the Spotlight
Following last week’s strong showing from the banks, this week brings earnings from 88 S&P 500 companies, including:
Netflix, Chubb, 3M, GE, Pulte, GE Aerospace, GE Vernova, AT&T, Tesla, Intel, and Procter & Gamble.
Once again, expectations are for earnings to come in above forecasts. And as always, corporate profits remain the primary driver of stock prices. With so many potential landmines in the news cycle, it’s surprising but telling that the market remains resilient.
Government Shutdown: Trick or Thanksgiving?
At the outset of the shutdown, I guessed Halloween would be a realistic target for resolution. That may now seem overly optimistic. At this rate, we may be celebrating a funding deal with our Thanksgiving dinner.
Unfortunately, as politicians dig in to protect their turf, essential economic data remains delayed. That’s a disservice to investors, retirees, and policymakers alike. We shouldn’t have to wait for scheduled releases while both sides jockey for political points.
What’s on Deck This Week?
Key scheduled economic data includes:
- September 2025 Consumer Price Index
- Leading Economic Index
- Philadelphia Non-Manufacturing Index
- Existing Home Sales
- Headline and Core CPI
- University of Michigan Consumer Sentiment
- Building Permits
Investors and retirees are also eagerly awaiting the Social Security COLA announcement and updated Medicare Part B premiums.
Final Thoughts
With strong corporate earnings, Fed rate decisions approaching, and government dysfunction ongoing, markets are balancing optimism with risk. Staying diversified and informed remains critical, especially for retirees navigating these uncertain waters.1
As always, thank you for reading. If you found this blog helpful, please share it with friends, family, or colleagues who may benefit from staying informed.
1 There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk. (26-LPL)
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
All market data sourced from The Wall Street Journal, October 17, 2025.
