Market participants search for new growth drivers
Although the main U.S. indexes hit new record highs last week, the overall performance was less convincing than many investors had hoped. The broad market optimism seems to have faded, and if it hadn’t been for Amazon’s (AMZN) stellar quarterly results, which sent its shares up more than 10% and lifted the NASDAQ to fresh highs, the week would likely have looked much less upbeat.
Much of the market’s gloom came from the Federal Reserve. After the FOMC meeting and the expected quarter-point rate cut, Fed officials repeatedly stressed that the outlook remains uncertain and that another cut in December may not happen.
On Friday, two federal judges ruled that President Donald Trump’s administration could not suspend food assistance for millions of Americans during the ongoing government shutdown, ordering the government to use reserve funds to keep benefits flowing. This came as Trump and his team planned to do the opposite – to halt federal support under the Supplemental Nutrition Assistance Program (SNAP) because of the shutdown. As a result, shares of food-related companies fell sharply, and the Consumer Defensive sector ended the week as the worst performer, with average losses of about 3.7%.
It is worth noting that despite the overall rise in indexes, only four of the eleven economic sectors ended the week in positive territory. As expected, the technology sector led the way, posting an average gain of more than 2%.
With few major macroeconomic releases, investors have turned their full attention to the ongoing earnings season. So far, U.S. companies have largely delivered, helping to sustain the market’s upward momentum. According to LSEG, out of the 315 S&P 500 companies that have already reported third-quarter results, 83.2% have beaten analysts’ expectations – well above the historical average of around 67%.
Still, there are early signs that momentum is starting to fade, and it’s happening amid rising trading volumes. At the same time, talk of an AI-fuelled bubble is growing louder. Last week offered another telling sign: Nvidia’s (NVDA) market capitalisation briefly topped $5 trillion in a single session – more than Germany’s GDP. The comparison may not be perfect, but it is certainly symbolic. This could mean that profit-taking will start to pick up pace, giving speculators a chance to push the market into a correction. Whether they will manage to do so remains to be seen.
Market expectation for November 3, 2025
The week ahead could prove both significant and uneasy. With no major official macroeconomic data scheduled, investors are paying closer attention to alternative indicators. This is why the upcoming ADP employment report, due on Wednesday before the market opens, is drawing particular interest. The figures are likely to set the tone for market sentiment and could determine the overall direction in the days to come.
The earnings season, which until recently gave investors a solid anchor for decision-making, has now passed its midpoint, with nearly 65% of S&P 500 companies having reported. This means its impact on the market will gradually fade, especially as most of the major players capable of moving sentiment have already released their results – six of the seven “Magnificent Seven” companies have reported. Among the few closely watched releases left this week are Advanced Micro Devices Inc. (AMD) and Qualcomm Inc. (QCOM). AMD is set to report on Tuesday after the market closes, with Qualcomm following a day later.
Asian markets are unlikely to provide much support either. Japan had been a bright spot in recent weeks, but its rally has taken the market so high that investors, much like in the U.S., are increasingly talking about an inevitable correction. China, meanwhile, shows little urgency in its recovery. As a result, investors are largely left to their own devices, making decisions almost blindly or guided by secondary indicators. This could lead to heightened volatility until a clearer consensus forms. Whether that happens may become clearer this week, which could offer the first clues about the market’s next direction – and that makes it more important. The key takeaway: stay alert, as the coming days may set the tone for the rest of the year.