Thu, October 30, 2025 | 6:00AM ET

Key takeaway Fed presser: inflation close to target but jobs is weak = dovish. Trump-Xi meeting is "12" on a scale of 1 to 10 = positive for stocks.

The S&P 500 closed essentially “flat” Wednesday after the Fed FOMC Oct rate decision. The cut of -25bp was expected, but Fed Chair Powell’s comments about future path of rates created a bit of market confusion. In reviewing carefully the press conference, we view his overall comments as dovish (explained below) and moreover, the Trump-Xi meeting seems to have gone well — enough so the President deemed it “on a scale of 1 to 10, the meeting with Xi was a 12”

Equities closed flat on Wednesday, but the intraday decline was more than 1% and the VIX climbed on the day from 16 to 17. Initially, equities responded negatively to Powell stating a Dec cut is “not a foregone” conclusion. But by the close, equities managed to climb back to flat.
Our takeaways from the FOMC press conference are as follows:
– Fed now viewing tariff related price increases as “one-time” and not inflation = good
– therefore, PCE inflation implied at 2.3%-2.4% “not that far off” from target = good
– Fed will not have PCE due to gov’t shutdown
– labor markets are showing slowing job gains, which he views as “due to supply”
– and he views job growth currently as “close to zero” = more likely to cut
– current rates are looser but “I wouldn’t say they are accomodative now” = room for cuts
To me, this is overall positive and more dovish than the official take. That is, the Fed is saying inflation is pretty much on target, rates have room to decline and there is no jobs growth. So, I would view this as overall dovish.
But the Fed did explain why “December is not a foregone conclusion” and it is due to disagreement among FOMC members about the neutral rate. Some believe the Fed is already there. But to me, this is also noise. If the job market continues to stall, the Fed will be dovish.
Part of the reason for jobs softness is the gains made by AI. Thus, corporate profits for those companies leveraged to AI, benefit from this shift. Meaning, equities could rise, and jobs market weakens, but this would lead to a dovish Fed. Because the Fed’s mandate is labor markets, not targeting corporate profits.
As for Trump-Xi meeting on Thursday, the reports coming from Asia are positive:
– President Trump “On a scale from 1 to 10, this meeting with Xi was a 12”
This is as good as one can expect. And as a result of the meeting:
– US and China will work to collaborate on Ukraine.
– China will begin buying soybeans and resume rare earth exports.
– Further discuss chip restrictions.
– China tariffs cut to 47% from 57%.
– Fentanyl tariffs slashed to 10% now
– Trump will visit China in April 2026 and Xi will visit the US soon.
And if one is wondering if US-China relations have healed, consider this quote by President Trump, as noted by Wilfred Frost:
– President Trump: “In the face of winds, waves & challenges, you & I should stay the right course & ensure the steady sailing forward of the giant ship of China-US relations. I always believe that China’s development goes hand in hand with your vision to Make America Great Again.”
The biggest events were the FOMC Press Conference and Trump-Xi Summit:
– 10/27 Mon 8:30 AM ET: Sep P Durable Goods Orders   0.20%e Delayed due to Shutdown
– 10/27 Mon 10:30 AM ET: Oct Dallas Fed Manu. Activity    -5.0 vs -7.8e
– 10/28 Tue 9:00 AM ET: Aug S&P Cotality CS 20-City MoM SA    0.19% vs -0.10%e
– 10/28 Tue 10:00 AM ET: Oct Richmond Fed Manu. Survey   -4 vs -12e
– 10/28 Tue 10:00 AM ET: Oct Conf. Board Consumer Confidence   94.6 vs 93.4e
– 10/29 Wed 2:00 PM ET: FOMC Rate Decision 25 bps cut
– 10/30 Thu 8:30 PM ET: 3Q A GDP Annualized QoQ   3.00%e
– 10/30 Thu: Trump-Xi Summit in South Korea
– 10/31 Fri 8:30 PM ET: Sep Core PCE Price Index MoM   0.20%e Delayed due to Shutdown
– 10/31 Fri 8:30 PM ET: 3Q Employment Cost Index YoY    0.90%e Delayed due to Shutdown
Overall, the week was positive, with a Fed giving the framework for future cuts — the very obvious and clear view that labor markets will determine the path. And as for US-China relations, the improved.
Between now and year-end, we reiterate our view that we “buy the dip” and while we should always expect wobbles, we “buy the dip” into year-end.

BOTTOM LINE: Still “most hated rally”

Seasonals remain favorable, and we see at least 5% upside into year-end which implies S&P 500 7,000. And this is arguably the base case, given that in 2025, the Fed only started cutting in September. This mirrors Sept 1998 and Sept 2024. In both instances, S&P 500 gained 13% in the 4th quarter. This still remains the “most hated” V-shaped stock rally. As for what we would buy

MAG7 & Bitcoin & Ethereum
Industrials
Financials: Large-cap and regional banks
Small-caps

Key takeaway Fed presser: inflation close to target but jobs is weak = dovish. Trump-Xi meeting is 12 on a scale of 1 to 10 = positive for stocks.

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Key Incoming Data October:

~~10/1 9:45 AM ET: Sep F S&P Global Manufacturing PMI~~ Tame
~~10/1 10:00 AM ET: Sep ISM Manufacturing PMI~~ Tame
~~10/2 10:00 AM ET: Aug F Durable Goods Orders MoM~~ Delayed due to Shutdown
~~10/3 8:30 AM ET: Sep Non-farm Payrolls~~ Delayed due to Shutdown
~~10/3 9:45 AM ET: Sep F S&P Global Services PMI~~ Tame
~~10/3 10:00 AM ET: Sep ISM Services PMI~~ Tame
~~10/7 8:30 AM ET: Aug Trade Balance~~ Delayed due to Shutdown
~~10/7 9:00 AM ET: Sep F Manheim Used Vehicle Index~~ Tame
~~10/7 11:00 AM ET: Sep NYFed 1yr Inf Exp~~ Tame
~~10/8 2:00 PM ET: Sep FOMC Meeting Minutes~~ Mixed
~~10/10 10:00 AM ET: Oct P U. Mich. 1yr Inf Exp~~ Tame
~~10/14 6:00 AM ET: Sep Small Business Optimism Survey~~ Tame
~~10/15 8:30 AM ET: Oct Empire Manufacturing Survey~~ Tame
~~10/15 2:00 PM ET: Fed Releases Beige Book~~ Mixed
~~10/16 8:30 AM ET: Oct Philly Fed Business Outlook~~ Tame
~~10/16 8:30 AM ET: Sep Core PPI MoM~~ Delayed due to Shutdown
~~10/16 8:30 AM ET: Sep Retail Sales~~ Delayed due to Shutdown
~~10/16 10:00 AM ET: Oct NAHB Housing Market Index~~ Tame
~~10/17 9:00 AM ET: Oct M Manheim Used Vehicle Index~~ Tame
~~10/17 4:00 PM ET: Aug Net TIC Flows~~ Delayed due to Shutdown
~~10/23 8:30 AM ET: Sep Chicago Fed Nat Activity Index~~ Delayed due to Shutdown
~~10/23 10:00 AM ET: Sep Existing Home Sales~~ Tame
~~10/23 11:00 AM ET: Oct Kansas City Fed Manufacturing Survey~~ Tame
~~10/24 8:30 AM ET: Sep Core CPI MoM~~ Tame
~~10/24 9:45 AM ET: Oct P S&P Global Services PMI~~ Tame
~~10/24 9:45 AM ET: Oct P S&P Global Manufacturing PMI~~ Tame
~~10/24 10:00 AM ET: Oct F U. Mich. 1yr Inf Exp~~ Tame
~~10/24 10:00 AM ET: Sep New Home Sales~~ Delayed due to Shutdown
~~10/27 8:30 AM ET: Sep P Durable Goods Orders MoM~~ Delayed due to Shutdown
~~10/27 10:30 AM ET: Oct Dallas Fed Manuf. Activity Survey~~ Tame
~~10/28 9:00 AM ET: Aug S&P CS home price 20-City MoM~~ Tame
~~10/28 10:00 AM ET: Oct Conference Board Consumer Confidence~~ Tame
~~10/28 10:00 AM ET: Oct Richmond Fed Manufacturing Survey~~ Tame
~~10/29 2:00 PM ET: Oct FOMC Decision~~ Dovish
10/30 8:30 AM ET: 3Q A GDP QoQ
10/31 8:30 AM ET: 3Q ECI QoQ
10/31 8:30 AM ET: Sep Core PCE MoM

Economic Data Performance Tracker 2025:

Economic Data Performance Tracker 2024:

Economic Data Performance Tracker 2023:

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