Weekly Market Update: October 13, 2025

The Federal Reserve is expected to reduce the benchmark short-term interest rate at this month’s Federal Open Market Committee (FOMC) meeting. The central bank telegraphed another cut at the September meeting when Chairman Jerome Powell stated that the balance of risk to achieving maximum employment and price stability has shifted to the employment side. Further, the Fed’s dot-plot, which is a quarterly chart showing each FOMC member’s individual projection for the federal funds rate over the next few years, suggests two more quarter-point reductions are likely before year’s end. 

The labor market is exhibiting signs of weakness. Although we have not yet received the September employment report due to the federal government shutdown, ancillary data have shown slowing job creation. The September employment report from Automatic Data Processing revealed that private-sector payrolls fell by 32,000 positions, the biggest monthly decline since March of 2023. Likewise, the Institute for Supply Management’s September reports on manufacturing and non-manufacturing (services) activity indicated a hiring slowdown in both sectors. On a positive note, the Job Openings and Labor Turnover Survey ( JOLTS) report showed an unexpected increase in the number of job openings in September. 

With the recent scarcity of fresh economic data, Wall Street will look to Corporate America for clues about the health of the U.S. economy. According to FactSet Research, estimated third-quarter profit growth for the S&P 500 companies is 8%. If realized, it would mark the ninth-straight quarter of earnings growth and could help justify the Index’s elevated valuation. Third-quarter earnings season also should reveal if companies are still absorbing the increased costs due to tariffs or starting to push them along to consumers in the form of higher prices. Shoppers have recently expressed concerns about an ability to maintain their spending budgets amid worries about tariffs and employment. 

Conclusion: The major equity averages are trading at or near record highs, driven by enthusiasm about artificial intelligence (AI) spending, a more-accommodative Federal Reserve on the monetary policy front, and a rollback in financial regulation, the latter of which has led to a surge in corporate deal making. Given this backdrop, we think a portfolio headed by stocks of high-quality companies is warranted. 

Source: ValueLine.com