Trick or Treat
November 5, 2025
While ghosts and ghouls may have lined neighborhood streets the last few weeks, markets were more treat than trick this month. Equities, both in the United States and abroad, closed the month with strong performances. As tracked by the S&P 500 and the Nasdaq Composite Index, domestic equities returned +1.99% and +4.28% respectively. Dispersion in the returns among the S&P 500 and Nasdaq can be largely attributed to the ongoing ‘mega-cap tech/AI’ story. The Nasdaq is more heavily weighted towards technology, and S&P 500 includes more headwind facing sectors like energy/industrials. Both of which have been met with supply chain challenges and trade concerns apart of tariff plans that have contributed to their lagging performance relative to the broader S&P 500.
It becomes increasingly concerning that, absent the technology powerhouses propping up these indices, domestic equity might have a more difficult row to hoe. Internationally, emerging market equities continued to dominate, returning +3.67% for the month as tracked by the MSCI Emerging Markets Index. International developed, returning +0.61% as tracked by MSCI EAFE still came back positive, but not quite on par with emerging markets. Emerging market performance is difficult to describe thematically because it varies so much country by country, but it’s true that much the of performance can be attributed to the currency pressures on the dollar.
As far as debt is concerned, Bloomberg U.S. Aggregate Total Return Value Unhedged Index +0.38%. Ten-year treasury yields were relatively flat, and credit spreads remain near historic lows. Inflation remains above the Fed’s coveted 2% target, yet monetary easing continues to develop. If the 2% target is foregone, then there is still some value in an allocation to inflation protected securities. Through the end of the year, credit may be narrated by quasi-private vehicles as the risk in those securities is increasingly diversified.
As the month turned to close, the Federal Open Market Committee met once again to vote on changes in monetary policy. For the second meeting in a row, the vote was to cut interest rates by .25%.2 This decision will continue the easing that began in September. Despite the ultimate change in rate, there was significant dissent in the decision to make the quarter rate cut, with one committee member voting for a greater cut and one for no cut at all. This is material because while committee members may have differing opinions throughout the discourse, when it comes time for the vote, there is generally a 12-0 consensus. In this case, the 10-2 vote really underscores that it’s not obvious which direction rates should go. The last Fed meeting of the year is scheduled to be held in early December, and as of this writing investors have priced in a decision to hold rates as tracked by Bloomberg’s World Interest Rate Probability function.
Politically the tariff conversation hasn’t really been settled, and much of it continues to change day by day. This continues to burden our consumer economy because it’s approaching six months that businesses have not been able to undertake long-term planning. In addition, the ongoing government shutdown has delayed the distribution of multiple regular data reports , giving investors an incomplete picture of labor statistics, inflation statistics, and general economic momentum. So, despite strong year-to-date returns and monetary policy easing, it’s not obvious what signs could point to optimism.
Hazel Allen
Portfolio Management Analyst
1https://am.jpmorgan.com/us/en/asset-management/adv/insights/market-insights/market-updates/on-the-minds-of-investors/who-wins-big-from-a-weaker-us-dollar/ ; Published August 27, 2025; Accessed October 31, 2025
2https://www.federalreserve.gov/newsevents/pressreleases/monetary20251029a.htm
Published October 29, 2025; Accessed October 31, 2025
The S&P 500 Index is the Standard & Poor’s Composite Index of 500 stocks and is a widely recognized, unmanaged index of common stock prices.
The NASDAQ Composite is a stock market index of the common stocks and similar securities listed on the NASDAQ stock market and it is highly followed in the U.S. as an indicator of the performance of stocks of technology companies and growth companies.
Monetary easing is a central bank's policy to stimulate economic growth by making money and credit more available, often by lowering interest rates or expanding the money supply. The goal is to lower borrowing costs, which encourages businesses and consumers to spend and invest more, boosting aggregate demand. When interest rates are already very low, this can involve measures like quantitative easing (QE), where a central bank buys assets to inject liquidity directly into the financial system.
Bloomberg U.S. Aggregate Total Return Value Unhedged Index is a broad-based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. Th index includes Treasuries, government-related and corporate securities, MBS(agency fixed-rate pass-throughs), ABS and CMBS (agency and non-agency).
The MSCI EAFE Index (Europe, Australasia, Far East) is an unmanaged free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the US & Canada.
The MSCI Emerging Markets Index consists of 23 economies including Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Russia, South Africa, Taiwan, Thailand, Turkey and the United Arab Emirates. The MSCI is a float-adjusted market capitalization index.
The Federal Open Market Committee (FOMC) is a committee of the Federal Reserve Board that meets regularly to set monetary policy, including the interest rates that are charged to banks.
Bloomberg's World Interest Rate Probability(WIRP) function is a chart that shows the probability of different interest rates for the US benchmark rate. The chart is based on interest rate caps and floors, as well as options on Treasury futures.
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