Stock Rally Wanes After $17 Trillion Historic Run: Markets Wrap
(Bloomberg) — Wall Street’s blistering run faded at the end of a month that’s lived up to its volatile reputation, with traders weighing concerns about the risks of a rally that’s heavily concentrated on tech giants.
Following a brief surge fueled by Amazon.com Inc. and Apple Inc.’s outlooks, the S&P 500 was little changed. The bond market steadied after a post-Federal Reserve rout. The dollar rose. A jump in oil waned as President Donald Trump denied he’d made a decision to strike military targets in Venezuela.
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From geopolitical to trade risks, a US government shutdown and high valuations, equity traders had a lot to digest in October. The flip side is that Corporate America remains strong, with artificial-intelligence prospects and rate cuts set to keep the momentum going for earnings.
To Mark Hackett at Nationwide, this week was a test of investors’ bullish thesis, with news on trade, monetary policy and earnings.
“There is increased skepticism about the participation in the rally, though many see this as the next in the line of ‘glass half empty’ arguments from bears that have seen most of their previous arguments fade,” he said. “Most indicators continue to support a strong market through year end.”
Since the April meltdown, the S&P 500 has soared almost 40% and is now on pace for its longest streak of monthly gains since 2021. The superlative is even better for the Nasdaq 100: a seven-month surge that’s set to be the longest in eight years, buoyed by big tech’s pristine balance-sheets and AI bullishness.
The S&P 500 hovered near 6,820. A gauge of the Magnificent Seven megacaps climbed about 1% Friday, poised for its longest monthly run since 2023. Amazon jumped 10%. Apple was little changed after gaining as much as 2.2%.
The Treasury market was also set for a month of gains even as momentum waned this week after Fed Chair Jerome Powell downplayed a December rate cut. The dollar headed toward its best month since July.
Read: Fed ‘Chorus’ Comes Out Against Latest Rate Cut, Citing Inflation
Market breadth remains a concern for traders. Michael Burry, the man who made his name shorting the US housing market, sent what appears to be a cryptic warning to retail investors about market exuberance. Equity performance in 2025 has been characterized by extreme concentration of volatility episodes, according to Barclays Plc strategists.
“The stock market’s narrowing participation suggests that while some stocks are enjoying a Halloween treat, many others are left empty-handed,” said Craig Johnson at Piper Sandler. “Given current divergences in market breadth, we maintain our view that the better risk/reward opportunities lie in buying dips within this six-month bull cycle.”
Meantime, the S&P 500 trades at 23 times forward earnings, well above its average of 16 over the past two decades. For the cohort of tech megacaps, valuations are even higher, at 31 times forward earnings.
If history is any guide, November kicks off the best six months of the year for US equities. But the question is whether those year-end gains have already been priced into the market following one of the S&P 500’s biggest stretches since the 1950s.
We now enter the best two-month seasonal period on the calendar, with an average return of 3.3% since 1950, according to Hackett at Nationwide.
“We are in the seasonally strong fourth quarter, so we are buying dips,” said Thomas Lee at Fundstrat Global Advisors. “There are many sectors posting double digit growth, so this is not only an AI story but rather demonstrates US corporates and multinationals are able to generate strong earnings gains.”
There’s no question that flows remain supportive for stocks. Global equities lured $17.2 billion in the week ending Oct. 29, said Bank of America Corp., citing EPFR data. And BofA strategist Michael Hartnett bets the AI equity leadership “ain’t budging for the time being.”
“We maintain our conviction that AI-related stocks should drive further equity performance and believe that underallocated investors should add exposure to the theme through a diversified approach,” said Mark Haefele at UBS Global Wealth Management.
Earnings season remains top of mind for equity investors, and so far it’s going very well. Results from more than 60% the companies in the S&P 500 are in, and the vast majority of those firms have topped estimates, according to data compiled by Bloomberg.
Ryan Grabinski at Strategas noted that mentions of “AI” in corporate transcripts continue to accelerate.
“Any concerns I previously had about a slowdown in capital expenditure appear to have been put to rest, at least for another quarter, as investment activity remains strong,” he said.
As enthusiasm and spending around artificial intelligence expands, AI is becoming increasingly integrated into sectors beyond technology, Grabinski said.
“This trend not only creates broader opportunities, but should also help support a more diversified market advance,” he concluded.
So far this year, the S&P 500 is up around 16%. Historically, January through October gains in excess of 10% have presaged positive results over the next two months, according to Jay Kaeppel at SentimenTrader.
“An 86% historical win rate during a typically seasonally strong time of year suggests favorable odds,” he said. “Nevertheless, traders are encouraged to allocate capital intelligently and to contemplate what action they might take if things do not go as planned.”
With markets hovering around all-time highs, driven once again by a handful of stocks, a key question we’ve been receiving in meetings lately is whether performance will broaden out, according to Chris Senyek at Wolfe Research.
Even though valuations remain at their long-term median for mid caps, the lack of earnings growth over the past several years led him to conclude that the market weighted large cap leadership will continue through year-end.
“Our sense is, with the AI spending narrative continuing to play a key role in markets, combined with large cap fund flows/retail investor engagement, large caps will likely continue to be favored,” Senyek said. “We don’t see the market broadening out until there is a sustainable shift in fundamentals/earnings for small and mid caps.”
Growth stocks trade at a wide valuation premium to value stocks today, but there is a crucial difference from 2000: Fundamentals are helping to support current valuations, noted Jeremiah Buckley at Janus Henderson Investors.
The gap in profitability between growth and value indexes has widened over time, helping explain why the valuation gap has grown as well, he said.
“Since 2002, increases in price-to-book ratios have been matched by comparable increases in return on equity. During the 2000 tech bubble, by contrast, growth valuations surged without any fundamental support,” Buckley concluded.
Corporate Highlights:
Amazon.com Inc. posted robust cloud growth that reassured investors that the tens of billions of dollars the company and its peers are pouring into artificial intelligence will pay off. Apple Inc. delivered mixed results in the latest quarter, including a surprise sales decline in China, tempering investor excitement for what promises to be a busy holiday season. Nvidia Corp. Chief Executive Officer Jensen Huang still hopes to sell chips from the company’s Blackwell lineup to customers in China, though he has no current plans to do so, he told reporters Friday. Just this month, Meta Platforms Inc. has secured about $60 billion in capital to build data centers, part of its spending to get ahead in the artificial intelligence race. Half of that won’t show up on the social media giant’s balance sheet as debt. Exxon Mobil Corp. and Chevron Corp. outperformed Wall Street expectations after new oilfield projects and acquisitions boosted crude output. Cloudflare Inc. posted better-than-expected sales figures that topped quarterly and annual estimates, following a reorganization and the addition of more large enterprise customers. Coinbase Global Inc., the largest US crypto exchange, reported revenue that exceeded Wall Street’s third-quarter estimates on the back of an uptick in trading while token prices climbed to record highs. Tether Holdings SA recorded more than $10 billion in unaudited profit for the first nine months of 2025, according to a blog post on Friday. Carlyle Group Inc. posted a slide in earnings at its private equity arm during the third quarter, leaning on the credit and secondaries businesses to carry the firm as it navigates a choppy dealmaking recovery. Colgate-Palmolive Co. reported third-quarter earnings above Wall Street’s consensus, driven by resilient consumer demand in Latin America. AbbVie Inc.’s beauty business weakened again last quarter, underscoring ongoing struggles in its aesthetics division even as booming sales of new anti-inflammatory drugs fueled higher-than-expected revenue and a raised annual forecast. What Bloomberg Strategists say…
“A major leg higher for the S&P 500 will require a fresh catalyst, but a declining vol backdrop should keep stocks melting up even as the macro outlook grows murkier.”
—Michael Ball, Macro Strategist, Markets Live. For the full analysis, click here.
Some of the main moves in markets:
Stocks
The S&P 500 was little changed as of 1:29 p.m. New York time The Nasdaq 100 rose 0.2% The Dow Jones Industrial Average fell 0.3% The MSCI World Index was little changed Bloomberg Magnificent 7 Total Return Index rose 0.8% The Russell 2000 Index fell 0.3% Currencies
The Bloomberg Dollar Spot Index rose 0.2% The euro fell 0.3% to $1.1525 The British pound fell 0.2% to $1.3130 The Japanese yen was little changed at 154.11 per dollar Cryptocurrencies
Bitcoin rose 1.5% to $109,117.23 Ether rose 1.8% to $3,825.94 Bonds
The yield on 10-year Treasuries was little changed at 4.09% Germany’s 10-year yield declined one basis point to 2.63% Britain’s 10-year yield declined one basis point to 4.41% The yield on 2-year Treasuries was little changed at 3.60% The yield on 30-year Treasuries advanced two basis points to 4.67% Commodities
West Texas Intermediate crude rose 0.6% to $60.94 a barrel Spot gold fell 1% to $3,986.04 an ounce –With assistance from Phil Kuntz.
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