For the week ending October 17, 2025.

Stocks rallied last week, with smaller companies and international markets leading the charge. The main driver was a cooler-than-expected inflation report released mid-week. This positive inflation news seemed to outweigh mixed signals from the manufacturing sector (strong in New York, weak in Philadelphia), continued weakness in the housing market, and declining small business optimism. Bonds also gained ground, and the U.S. dollar fell, helping to boost commodities like gold.

U.S. Equity Style Performance

U.S. equities posted solid gains across various categories, with smaller companies leading the charge. Small-cap stocks were the standout, climbing 2.91% overall. Within this group, Small Value stocks surged 3.11%, driven by undervalued firms in sectors like industrials and financials, while Small Growth followed closely with a 2.81% gain, fueled by optimism for innovative firms in a potentially lower-rate environment. Mid-cap stocks also performed well, with Mid Value up 2.18% (led by companies like Terex Corp in construction) and Mid Growth rising 1.63%, reflecting investor confidence in firms with balanced growth and stability. Among large-cap stocks, Large Growth slightly outperformed Large Value, gaining 1.78% versus 1.72%, as investors leaned toward tech-heavy growth stocks like NVIDIA (+3.2%) over traditional value plays.

U.S. Sector Performance

Real Estate Investment Trusts (REITs) topped the list, soaring 3.48%, likely buoyed by falling bond yields (10-year Treasury yields dipped to ~4.1%) despite persistent weakness in mortgage applications. Consumer Discretionary (+2.48%) and Technology (+2.38%) also shone, with standout performers like Tesla (+4.1%) and Apple (+2.9%) benefiting from strong earnings outlooks and AI-driven demand. Consumer Staples (+2.09%) and Utilities (+1.52%) posted solid gains, reflecting defensive positioning amid trade war fears. Energy (+0.89%) saw modest gains, supported by oil prices stabilizing near $70/barrel, while Healthcare (+0.82%) lagged, weighed down by regulatory concerns in biotech. Financials were nearly flat (+0.04%), held back by mixed manufacturing data (ISM PMI at 49.2, signaling contraction) and uncertainty over loan demand and economic growth.

International Equity Markets

Foreign stocks had an excellent week, getting a significant boost from the falling U.S. dollar. Latin American markets were the big winners, soaring 3.71%—led by Brazil's Bovespa (+4.2%, driven by commodity exporters like Vale) and Mexico's IPC (+3.5%, buoyed by nearshoring gains). Markets in the Pacific region also performed very well, gaining 3.44%, with standout performers including Japan's Nikkei 225 (+1.5%, fueled by tech rebounds and new PM optimism) and Australia's ASX 200 (+2.8%, on mining strength amid gold's rally). While broader Asia dipped due to U.S.-China trade jitters (e.g., Shanghai Composite -1.2%), the Pacific subset shone. European stocks posted a respectable 1.97% return, highlighted by Spain's IBEX 35 (+1.3%, infrastructure-led) and France's CAC 40 (+1.1%, luxury rebound on China talks), despite Germany's DAX lagging at +0.8% on fiscal caution.

BOND MARKETS

U.S. bonds rose steadily as Treasury yields fell to ~4.1% and expectations of a Federal Reserve rate pause grew amid a weak ISM Manufacturing PMI (49.2). The Core U.S. Bond Index gained 0.53%, led by Treasuries and corporate bonds from firms like Apple, while High Yield Bonds climbed 0.93%, driven by energy and consumer discretionary sectors. Despite weak mortgage applications, bonds offered stability against equity and Bitcoin (-8%) volatility.

International bonds gained 0.74%, boosted by a weaker U.S. dollar (DXY -1.5%) and safe-haven demand. European bonds rose with ECB rate cut signals, while Latin American debt, like Brazil’s (+1.1%), led due to commodity strength. Asian bonds lagged slightly due to China’s trade and deflation woes, but euro and yen gains enhanced returns for U.S. investors.

Commodities and Currencies

Gold had a great week, shooting up 5.38% to around $2,700 per ounce, a new all-time high, driven by a 0.50% decline in the U.S. dollar (DXY) and a drop in 10-year Treasury yields. The Bloomberg Commodity Index barely moved, as investors favored gold over cyclical commodities amid trade war concerns. Crude oil (+0.5%, ~$70/barrel) was supported by OPEC+ cuts but capped by China’s weak demand. Copper (+0.3%) rose with Latin America’s strength (Bovespa +4.2%), while wheat and corn dipped ~0.2% due to oversupply. Silver (+1.8%) trailed gold’s rally.

Bitcoin fell 8-9% overall, trading between $103,000 and $116,000. It closed at ~$107,000, down 5% month-to-date, hit by geopolitical tensions and on track for October’s worst performance in a decade.