Global markets continued their upward momentum in October, buoyed by robust earnings and a constructive political backdrop.
The S&P 500 is expected to close the month up 2% following a brief correction mid-October.
In this favorable seasonal environment, we maintain a measured optimism and view every market pullback as an opportunity for strategic portfolio repositioning.
Key market Highlights
- Earnings Momentum: Third-quarter results proved exceptionally strong. Of the 244 S&P 500 companies, 83% exceeded expectations, supporting an estimated 12% annual earnings growth.
- Innovation & Artificial Intelligence: Leading U.S. technology companies continue to dominate investment flows, with AI transforming productivity and growth across sectors.
- Digital Assets: The cryptocurrency market saw volatility in October, but blockchain and tokenization adoption continues to accelerate.
- Profit-taking in Gold: Significant profit-taking occurred in gold this month after new historic highs during heightened volatility. Our long-term conviction remains positive on precious metals; gold continues to play a crucial role in diversification and wealth protection.
- Federal Reserve Policy: With inflationary pressures subsiding, the Fed is adopting a more dovish stance, and quantitative tightening will end on December 1st.
- Private Credit Conditions: The private credit risk profile requires continued vigilance, although conditions remain contained at this stage.
- Investor Sentiment: Caution still prevails, leaving considerable upside potential for a year-end rally should fundamentals remain intact.
Despite lingering concerns such as risks in private credit and the U.S. government shutdown, American companies have displayed remarkable agility.
Amazon’s latest results underscore the strategic importance of technology investments to overcome macroeconomic challenges and prepare for the next growth phase.
A further monetary easing by the Fed could occur as soon as December, even as the central bank remains cautious and vague on the exact timetable.
The combination of favorable seasonality, persistent portfolio underexposure, and strong earnings momentum suggests at least an additional 5% upside by year-end, with the S&P 500 expected around 7,000 points aligned with historical fourth-quarter rallies following initial Fed easing.
