Investment Update October 7, 2025

Last Week on Wall Street

Economic data included an improvement in the ISM manufacturing report, although it stayed in contraction, while ISM services fell to neutral. Several reports weren’t published because of the Federal government shutdown, including the closely-watched employment situation report.

Equities saw gains last week globally, led by international markets. U.S. Bonds fared positively as well, as assumed plans for Federal Reserve easing and the government shutdown pulled down yields. Commodities were mixed, with strength in metals and weakness in energy.

U.S. stocks fared positively, despite the realization of a government shutdown at quarter-end, being offset by weaker labor data, which perpetuated the assumption of another Federal Reserve interest rate cut late in October. Artificial intelligence sentiment and momentum also remained high. By sector, gains were strongest in health care, followed by utilities and technology. In health care, up 7%, this was led mostly by Pfizer, after an agreement between the firm and the U.S. administration to lower prescription drug prices in the Medicaid program in exchange for tariff relief. Declines were most pronounced in energy and communications, with the former being due to falling oil prices. Real estate ticked up slightly for the week, with declines in interest rates. Earnings results for Q3 will be rolling out next week, which could take some of the attention away from other macro events.

Foreign stocks outperformed U.S. stocks for the week, helped by a weaker U.S. dollar, with Europe beating Japan. Europe’s gains appeared to be partially due to European Central Bank comments about inflation appearing more balanced and ‘contained.’ Emerging markets also fared positively, with gains in China, in addition to continued strength in South Korea and Taiwan, which are especially tied to U.S. technology sentiment.

Bond yields fell back for the week, in keeping with prior U.S. government shutdown episodes. This propelled U.S. Treasuries and investment-grade corporate bonds higher, while high yield and floating rate bank loans also gained to a lesser degree. International bond benefited from a decline in the U.S. dollar, in addition to falling yields.

Commodities were mixed, with gains in precious and industrial metals offset by declines in energy. Crude oil prices fell over -7% last week to $61/barrel, due to continued concerns over high supply inventories and tepid demand, and specifically early reports of an OPEC+ production increase for November. A fire in a Southern California refinery late in the week did not negatively affect prices for gasoline right away, but this could be a factor in the coming week. Refinery capacity is somewhat limited in certain locations, making these especially sensitive to supply disruptions.

(Source LSAConnect)

Fact of the Week

Amazon must pay $2.5 billion in fines from the Federal Trade Commission for deceiving customers into signing up for subscriptions (source: Reuters).