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The stock market continued its October rebound with a decisive move higher this week, powered by a combination of upbeat earnings, a cooler-than-expected inflation report, and renewed optimism around U.S.-China trade relations. The S&P 500, Nasdaq Composite, and Dow Jones Industrial Average each closed at fresh record highs by Friday, marking a full recovery from the early-October pullback. Gains were broad-based, with strong participation from cyclical, technology, and financial names, underscoring investor confidence in both corporate and macroeconomic momentum.

This week’s action can be summarized across three dominant themes:

1. Return of earnings-driven leadership
2. Macro tailwind from softer inflation and rising rate-cut expectations
3. Growing sense of geopolitical and trade stability.

In addition, I'm keeping a close eye on oil’s rebound this week off key long-term support near $56, which I'll highlight below.

Earnings Season Ignites Sector Rotation and Confidence

Corporate earnings were the primary market driver this week, fueling sector-specific rallies and helping equities reclaim record levels. After several sessions of choppy action earlier in the month, investors responded positively to a string of earnings beats across industrials, consumer discretionary, and technology.

Industrials and Manufacturing Strength

3M (+7.7%), Raytheon (+7.7%), and Honeywell (+6.8%) each delivered beat-and-raise results, reinforcing the sector’s reputation as a bellwether for the broader economy. The iShares U.S. Aerospace & Defense ETF climbed nearly 2% midweek, aided by strong results from GE Aerospace (+1.3%) and Danaher (+5.9%). Even though Lockheed Martin and Northrop Grumman gave back modest ground after their own beats, the group as a whole outperformed, suggesting resilient demand for defense and manufacturing capacity amid heightened geopolitical tensions.

Consumer Discretionary and Auto Stocks Roar Back

The consumer discretionary sector also came alive thanks to an eye-catching surge in automakers. General Motors (+14.9%) raised full-year guidance and downplayed tariff concerns, triggering sympathy gains in Ford (+4.8% Tuesday, +10.3% Friday). Las Vegas Sands (+12.4%) added a spark later in the week after beating expectations and boosting its dividend, showing renewed consumer strength in both travel and leisure spending. The group’s rebound, combined with Tesla’s (+2.3%) late-week recovery after its earnings miss, suggested that investors are still favoring companies with credible growth narratives and manageable cost structures.

Tech Earnings and Semiconductors Take the Lead

Technology remained a steady source of leadership throughout the week, though volatility persisted within chipmakers. Advanced Micro Devices (+6.6%), Super Micro Computer (+5.5%), and Lam Research (+4.5%) all posted sharp gains, lifting the PHLX Semiconductor Index 2.1% midday Friday. Even after Texas Instruments’ rare earnings miss and subdued guidance midweek, semiconductor optimism returned quickly, helped by IBM’s endorsement of AMD chips for quantum computing and Alphabet’s expanded AI infrastructure deal with Anthropic.

The rotation toward tech and industrial names—sectors that benefit from both AI-driven investment and cyclical recovery—reflected renewed risk appetite as the week progressed.

Investment Implication: Earnings breadth is widening beyond the “Magnificent Seven,” signaling a healthier bull market foundation. Continued strength in industrial and semiconductor names may foreshadow a fourth-quarter leadership shift toward cyclicals and infrastructure plays tied to capital expenditure and AI manufacturing demand.

See related: America at a Crossroads: Build Like China or Fall Behind

Cooling Inflation Reinforces the Case for Fed Rate Cuts

Friday’s September CPI report confirmed the inflation slowdown investors had been hoping for. Headline CPI rose 0.3% month-over-month (below the 0.4% consensus), while core CPI increased 0.2% versus expectations for 0.3%. The data strengthened the market’s conviction that the Federal Reserve will deliver a 25-basis-point rate cut at next week’s meeting, with futures now fully pricing in an additional cut by December.

Bond yields pulled back modestly in response, boosting equity valuations and extending gains in rate-sensitive sectors such as utilities (+1.5%), real estate (+0.4%), and financials (+1.3%). Bank stocks also gained momentum, with the KBW Regional Banking ETF rising 2.5% earlier in the week and names like Zions Bancorp (+4.6%) trading higher after alleviating credit concerns.

The inflation news followed several other encouraging data points. Existing home sales rose 1.5% in September, aided by easing mortgage rates, while S&P Global’s preliminary Manufacturing and Services PMIs both edged higher, reflecting stabilization in business activity. Although University of Michigan’s Consumer Sentiment Index remained subdued at 53.6, persistently high inflation expectations did little to dampen the market’s optimism after Friday’s CPI relief.

From a broader perspective, the cooling inflation trend offers a tailwind to both equity valuations and earnings expectations. A softer rate path could extend the current economic cycle, allowing companies to refinance debt more cheaply and maintain capital spending even as growth moderates.

Investment Implication: The market’s rally now rests on an increasingly dovish Fed outlook. If inflation continues to trend lower, investors could see renewed upside in rate-sensitive sectors—particularly financials, real estate, and utilities—while also supporting high-growth tech valuations heading into 2026.

Trade Optimism and Geopolitical Tensions Set Sector Inflection Points

The week also brought a notable shift in geopolitical tone. What began as renewed trade tensions on Wednesday—after reports that the U.S. might impose software export restrictions on China in retaliation for rare earth curbs—ended with a clear turn toward diplomacy. By Thursday, President Trump announced plans to travel to Asia next week for trade talks with 12 countries, including a meeting with Chinese President Xi on October 30. The agenda is said to include soybeans, rare earth metals, nuclear cooperation, and TikTok, with the President calling the previously proposed 157% tariffs “unsustainable.”

The trade thaw, combined with upbeat corporate results, ignited a strong rally in semiconductors, energy, and materials—three sectors most exposed to global trade flows. The energy sector gained 1.3% Thursday after the Treasury Department imposed sanctions on Russian oil giants Rosneft and Lukoil, pushing crude oil above $61 per barrel for the first time in a month. These developments suggest a possible inflection for the oil market, where tightening supply could offset the drag from slower global growth.

By week’s end, the overall tone between Washington and Beijing appeared more constructive. Markets clearly welcomed this shift, as Apple (+3.9%), Alphabet (+2.9%), and Meta (+2.1%) led a recovery in communication services and consumer tech names. Improved sentiment also helped the Vanguard Mega Cap Growth ETF rise 1.1% midday Friday, showing that investors remain eager to buy dips in global-facing growth leaders.

However, the geopolitical backdrop remains fluid. The U.S. is expected to announce new sanctions on Russia, while any setback in China talks could reignite volatility in semiconductors and materials. As such, investors are balancing optimism with caution, recognizing that sector leadership could shift rapidly if trade negotiations falter.

Investment Implication: The potential U.S.-China détente could mark an inflection point for semiconductors, energy, and materials, as improving trade flows and reduced tariff risks favor cyclical global exporters. However, continued geopolitical uncertainty keeps a premium on diversification across both growth and defensive assets. Cleveland-Cliffs' climb of 21.5% on Monday showed how the new trade environment is helping domestic production with the company noting Q3 marked a clear sign of demand recovery for U.S.-made automotive-grade steel.

Related: Bull Market in Commodities, Hard Assets Still in Early Innings, Says Jim Puplava

Chart of the Week

West Texas Intermediate (WTI) crude’s rebound from key long-term support near $56 offered only a brief buying window earlier in the week. The Treasury Department’s sanctions on Rosneft and Lukoil Thursday proved pivotal, reversing October’s short-term downtrend and reigniting momentum. WTI now faces several technical hurdles — first, the 50-day moving average, followed by the series of lower highs that have formed since June, and finally, the 200-day moving average overhead.

The technical bounce off $56 was justified, and the sanctions news has provided some initial fuel for the move. However, a sustained bullish trend will require upward revisions in global and U.S. growth expectations, as crude oil typically lags broader economic recoveries. A further sign of a potential inflection point would be a break above the 14-day RSI level of 60, a threshold WTI hasn’t surpassed since June.

Source: StockCharts, Ryan Puplava, CMT® CTS™ CES™

Looking Ahead

The week ended on a high note, with the S&P 500 and Nasdaq Composite hitting all-time highs and the Russell 2000 outperforming thanks to renewed risk appetite. Broad market participation, combined with a cooler inflation print and solid corporate earnings, helped reinforce confidence in the U.S. economy despite the ongoing government shutdown.

Next week’s focus will turn to the Federal Reserve’s policy decision and the next round of mega-cap earnings, including Amazon, Apple, and Meta. With the government shutdown nearing a potential resolution and trade talks set to resume in Asia, the market enters a pivotal period where both policy clarity and earnings execution will determine whether this breakout sustains through year-end.

For now, investors appear to have regained their footing. The combination of improving macro data, dovish monetary expectations, and resilient earnings power suggests that the fourth quarter could see continued strength—so long as inflation trends and trade diplomacy cooperate.

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