October 2025 | Monthly market recap
U.S. stock market continued its climb into rarified air
The Federal Reserve delivered its second straight month of interest rate reductions in October, although Chairman Jerome Powell cautioned that the future trajectory of rates was far from certain. Parts of the federal government remained closed for the entire month, as the shutdown that began on October 1 had yet to be resolved. The underlying strength of the U.S. economy remained something of a question mark, with inflation still higher than hoped for and corporate hiring appearing fairly lackluster.
ONE-MONTH PERFORMANCE as of 10/31/25 | ||||
|---|---|---|---|---|
U.S. large caps (S&P 500) | U.S. small caps (Russell 2000) | International developed (MSCI EAFE) | Emerging markets (MSCI EM) | Investment-grade bonds (Bloomberg Agg) |
2.34% | 1.81% | 1.18% | 4.18% | 0.63% |
Source: Boston Partners; all data via individual index providers. Past performance does not guarantee future results. See below for definitions.
Despite earnings growth, many stocks continue to look expensive
For the fifth month in a row, the S&P 500 Index notched a new all-time high amid a relatively strong earnings season. But the price investors are now paying for those earnings has been raising some eyebrows. Unlike more garden-variety measures that examine stock prices relative to the past year’s actual earnings or the next year’s expected earnings, the Schiller P/E ratio looks at the past 10 years’ worth of earnings and adjusts for inflation. The resulting ratio for the S&P 500 at the end of October was 40, which is territory that was only reached once in the past century: during the peak of the Dot-Com Bubble.
KEY ECONOMIC INDICATORS | |||||
|---|---|---|---|---|---|
GDP | Fed funds rate | 10-year UST | Inflation (CPI) | Jobs | |
Most recent | 3.8% | 3.75%–4.00% | 4.11% | 3.0% | 22,000 |
Prior reading | –0.6% | 4.00%–4.25% | 4.16% | 2.9% | 79,000 |
Sources: Gross domestic product (GDP) via the U.S. Bureau of Economic Analysis. Federal funds rate via the Federal Reserve Bank of St. Louis (FRED). 10-year U.S. Treasury (UST) rates via the U.S. Department of the Treasury. Inflation (CPI) and jobs (non-farm payroll figures) via the U.S. Bureau of Labor Statistics. All “most recent” data is for the month of October and is compared with the month prior, except GDP, CPI, and jobs figures, which reflect September data—the most recent available due to the federal government shutdown. Note that GDP data is compared with the prior quarter.
Emerging markets led the way among international equities
Developed-market international stocks recorded another month of gains in October, while emerging markets again eclipsed the returns for both international and U.S. equities. Sentiment improved late in the month as tariff and trade negotiations between the United States and China struck a more constructive tone. Earnings remained relatively robust, but valuations and concentration risk were both areas of ongoing concern. The U.S. dollar rallied in October, reversing a string of monthly declines versus major foreign currencies. The stronger dollar acted as a mild headwind for domestic investors in international foreign-denominated securities.
Federal Reserve’s path forward looks less certain
The last two rate cuts from the Fed were as close to certainty as anything in the financial markets gets. But where the Fed goes from here is less clear. Futures markets currently anticipate 2-to-1 odds in favor of another 25 basis point reduction during the Fed’s December meeting, while the odds of an additional cut in January are just 25%. A lot can change over the next several weeks, but based on market-watchers and the Fed’s own statements, it would appear that monetary policy may be close to a neutral stance.
Bond markets posted modest gains against backdrop of another rate cut
Intermediate-term, investment-grade bonds were up slightly in October, as investors weighed the prospects of a potentially slowing U.S. economy against the reality of continued easing of monetary policy from the Federal Reserve. Ultimately, longer-term bonds were generally range bound during the month, while shorter-term bonds saw yields trend lower, resulting in a somewhat steeper yield curve.
Upcoming key events
- November 18: The Home Depot reports earnings
- November 19: Nvidia reports earnings
- November 20: Walmart reports earnings
Chart of the month
In October, Nvidia became the first company to reach a $5 trillion valuation, which is slightly larger than the GDP of Germany. It took a mere 78 days to go from $4 trillion to the latest milestone and if Nvidia were somehow able to sustain that clip, it’d reach $6 trillion sometime in January. How long the current trend can continue unabated is anyone’s guess, but for now the momentum is flowing entirely one direction for the world’s largest company.
Source: The Wall Street Journal, as of October 29, 2025. Past performance does not guarantee future results.
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Important information
Boston Partners Global Investors, Inc. (Boston Partners) is composed of three divisions, Boston Partners, Boston Partners Private Wealth, and Weiss, Peck & Greer (WPG) Partners, and is an indirect, wholly owned subsidiary of ORIX Corporation of Japan (ORIX).
The views and opinions expressed may change based on market and other conditions. This material is provided for informational purposes only and should not be construed as investment advice. There can be no assurance that developments will transpire as forecasted. Actual results may vary. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.
The Bloomberg U.S. Aggregate Bond Index tracks the performance of intermediate-term investment-grade bonds traded in the United States. The Consumer Price Index is a commonly used measure of inflation that tracks the variation in prices paid by typical consumers for retail goods and other items. The MSCI EAFE Index tracks the performance of large- and mid-cap equities traded across global developed markets, excluding the United States and Canada. The MSCI Emerging Markets Index tracks the performance of large- and mid-cap equities traded in global emerging markets. The Russell 2000 Index tracks the performance of the 2,000 smallest companies traded in the United States. The S&P 500 Index tracks the performance of the 500 largest companies traded in the United States. It is not possible to invest directly in an index.
The breakpoints for capitalization ranges should be viewed only as guideposts and will change over time. In general, FTSE Russell (which maintains a number of stock-market indexes based on company size) considers small-cap stocks to have market caps of between $150 million and $7 billion, mid caps to have market caps between $7 billion and $150 billion, and large caps to be those companies with market caps above $150 billion.
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