Weekly Market Update: November 3, 2025

The Federal Reserve cut the federal funds rate by a quarter point at its October Federal Open Market Committee (FOMC) meeting. The second reduction of this year lowered the benchmark short-term interest rate to a range of 3.75% to 4.00%. The central bank policymakers, including Federal Reserve Chairman Jerome Powell, also hinted that another cut is possible at the December FOMC meeting, with concerns about a weakening labor market the main impetus for loosening the monetary policy reins. Investors should note that all labor data from the federal government has been delayed by the ongoing shutdown. 

The September Consumer Price Index (CPI) report gave the Fed the green light to further reduce interest rates. True, both the CPI and the core CPI, which excludes the food and energy components, are still running well above the Fed’s target rate of 2.0%, but the September figures were a bit better than expectations. Specifically, the CPI and core CPI increased 0.3% and 0.2%, respectively, on a month-to-month basis. From a one-year perspective, the CPI and core CPI both rose 3.0%, again slightly below forecasts. On the positive side, the CPI report indicated some easing in energy prices and in rents, and showed that the new tariffs have not yet led to substantial increases in prices. 

Third-quarter earnings season is looking good. With roughly 40% of the S&P 500 companies having reported as of press time, more than 80% had exceeded revenues and profit forecasts. The S&P 500 Index still remains on pace to produce high-single- digit earnings growth for the three-month period. 

Meantime, international trade tensions may be easing a bit. As we went to press, the United States and China had reportedly reached a framework agreement on trade ahead of the much-anticipated meeting between President Trump and China’s President Xi Jinping. A deal between the world’s two largest economies would remove a headwind for the global financial markets. We do warn that this situation remains fluid and can change quickly. 

Conclusion: The aforementioned catalysts are in place for exuberant traders to push the major equity averages higher into year’s end, despite warning calls from some prominent market participants that stock valuations may be too high. 

Source: ValueLine.com