Equity markets ended October on a cautious note, as investors digested a heavy flow of earnings and Fed Chair Powell said a December Fed cut is not a done deal. The S&P 500 gained modestly (+0.7%), though breadth narrowed sharply as mega-cap tech once again dominated leadership (the Mag-7 index up +3.2%). The MSCI World Index rose +0.5% (in USD), with China down -1.5% despite a trade truce with the US, but Korea up +6.9% and Japan up +1.9%.

It was the busiest earnings week of the season. As of now, 75% of US companies have reported, with results strong in aggregate with 83% beating expectations and EPS on track to grow 12% yoy. Yet the market reaction was muted, reflecting the slightly hawkish guidance by the Fed and elevated valuations. Misses were punished severely, falling an average -750 bps in next-day trading, about three times worse than historical norms (Bank of America).

Tech results reaffirmed the market’s AI focus: Microsoft and Alphabet showed solid cloud-driven resilience, while Amazon impressed with stronger cloud growth and margin execution. Data centre builders continued to raise capex plans, benefiting AI semis and hardware names globally. By contrast, Meta fell after turning to debt financing amid rising costs, and smaller semis and software names faced profit-taking (ServiceNow slipped despite a beat-and-raise).

Consumer-facing sectors signaled strain, with weaker volumes and cautious holiday guidance from retailers and staples alike. Chipotle shares tumbled -22% over the week, as low- and mid-income US consumers showed signs of fatigue. Industrials were held back by order softness and cautious 2025 commentary, despite a strong Caterpillar print. Energy was subdued, while Utilities, Healthcare, and Real Estate lagged as Treasury volatility persisted.

In Europe, Financials stood out with solid results from several banks, while the rest of the market weakened - particularly Consumer (auto), Construction, and Materials sectors.

Overall, the week underscored a maturing earnings cycle. Growth remains positive but increasingly selective, with investor focus shifting from headline beats to 2025 visibility and capital discipline.