Key Points
- Trade Tensions Whipsaw: President Trump reversed course on China tariff threats Monday after announcing 100% additional tariffs on Friday, declaring "it will all be fine" and triggering the S&P 500's best single-day gain since May with a 1.6% surge.
- Banking Sector Strength: Q3 2025 earnings season kicked off with stellar results from major banks, as JPMorgan Chase posted a 12% profit jump to $14.39 billion and Goldman Sachs reported a 20% revenue surge to $15.18 billion, though regional bank fraud revelations dampened sentiment by week's end.
- Gold's Nuclear Rally: Gold prices smashed through record levels, surging from $4,080 to $4,380 per ounce as investors sought safe havens amid credit concerns and geopolitical uncertainty, marking a 51% year-to-date gain.
- Tech Partnerships: Walmart shares jumped 5% on its OpenAI ChatGPT shopping partnership, while Broadcom soared nearly 10% on a strategic collaboration with OpenAI to deploy 10 gigawatts of custom AI accelerators.
- Credit Fears Emerge: Regional banks Zions Bancorp and Western Alliance disclosed fraud-related loan losses Thursday, triggering a sector-wide selloff and raising concerns about broader credit quality issues.
Overview
The week of October 13-17, 2025, delivered a masterclass in market volatility as investors navigated dramatic policy reversals, strong corporate earnings, and emerging credit concerns. Markets opened Monday with explosive gains after President Trump walked back his aggressive tariff stance on China, only to close Friday with renewed anxiety over regional bank loan quality and a deteriorating crypto market. The S&P 500 experienced wild swings throughout the week, while safe-haven assets like gold reached unprecedented heights. The third-quarter earnings season launched with Wall Street's major banks delivering robust results that exceeded expectations, highlighting the strength of trading desks and investment banking operations. However, the ongoing government shutdown continued to deprive markets of crucial economic data, and by week's end, fraud allegations at regional lenders cast a shadow over the financial sector's health, underscoring the complex and uncertain landscape facing investors as the year moves toward its final quarter.
Financial Markets Weekly Recap
Equities
Market Indices: The week began with remarkable strength as the S&P 500 surged 1.6% on Monday, marking its best single-day performance since May. The index jumped 102 points to close at 6,654.72, recovering more than half of Friday's losses. The Nasdaq Composite leaped 2.2%, gaining 490 points to reach 22,694.61, while the Dow Jones Industrial Average climbed 587 points, or 1.3%, to finish at 46,067.58. The rally came after President Trump softened his rhetoric on China, posting on Truth Social that "it will all be fine" and suggesting Chinese President Xi Jinping "just had a bad moment." This dramatic reversal followed Friday's market rout, when Trump threatened an additional 100% tariff on Chinese imports effective November 1.
By Tuesday, markets maintained momentum as major banks kicked off earnings season with impressive results, though the government shutdown entered its second week, continuing to block the release of critical economic data. Wednesday saw continued gains as strong bank earnings fueled optimism for a solid start to Q3 reporting season. However, Thursday brought a sharp reversal as the Dow shed 300 points following revelations of fraud-related loan losses at regional banks. By Friday, credit fears had intensified, with the S&P 500 trading around 6,629, down from the week's highs.
Sector Performance: Technology stocks led Monday's rally, with the semiconductor sector particularly strong. The Philadelphia Semiconductor Index (SOX) surged 4.9% as tariff fears subsided. Broadcom emerged as the week's standout performer, soaring 9.9% on Tuesday after announcing a strategic partnership with OpenAI to develop custom AI accelerators. Micron Technology gained 9.1% and Monolithic Power climbed 8.1% as chip stocks recovered sharply from the previous week's tariff-driven selloff.
Financial stocks dominated headlines with the launch of Q3 earnings season. Major banks delivered results that exceeded Wall Street expectations, with investment banking and trading revenues driving strong performance. However, the regional banking sector faced significant pressure Thursday and Friday after fraud disclosures triggered concerns about credit quality across the industry. The KBW Regional Banking Index dropped nearly 4% on Thursday alone.
Consumer discretionary stocks benefited from easing tariff concerns. Best Buy rebounded approximately 10% on Monday as investors anticipated reduced pressure from Chinese import costs. Retail stocks broadly gained ground on optimism that trade tensions would ease.
Corporate Highlights:
- JPMorgan Chase: The nation's largest bank kicked off earnings season Tuesday with stellar results, reporting third-quarter earnings of $5.07 per share, beating estimates of $4.84. Revenue reached $47.12 billion, surpassing the expected $45.4 billion, as profit jumped 12% to $14.39 billion. Fixed income trading surged 21% to $5.6 billion, exceeding estimates by approximately $300 million, while equity trading soared 33% to $3.3 billion. Investment banking fees climbed 16% to $2.6 billion. The bank raised its full-year net interest income forecast to approximately $95 billion, up from $95.5 billion. Trading revenue hit a record $8.9 billion for the quarter. CEO Jamie Dimon noted the U.S. economy "generally remains resilient" but warned of "pronounced uncertainty" due to geopolitical situations, tariffs, high asset valuations, and persistent inflation risks.
- Goldman Sachs: The investment bank reported net revenues of $15.18 billion and net earnings of $4.10 billion for Q3, with diluted earnings per share of $12.25, beating estimates significantly. Revenue surged 20% compared to the third quarter of 2024, reflecting higher net revenues across all segments. Investment banking fees totaled $2.66 billion, up 42% year-over-year, driven by significantly higher advisory revenues from increased M&A volumes and improved debt underwriting, particularly in leveraged finance. The firm's Global Banking & Markets division generated $10.12 billion in net revenues, up 18% from a year earlier. Asset and Wealth Management delivered $4.4 billion in net revenues, rising 17% year-over-year. Despite the strong results, shares slipped about 2% Tuesday morning as investors digested the rally and cautious peer commentary. CEO David Solomon emphasized the firm's focus on operating more efficiently and leveraging AI technologies.
- Walmart: Shares surged nearly 5% Tuesday, reaching a 52-week high after announcing a groundbreaking partnership with OpenAI to enable shopping directly through ChatGPT using the new Instant Checkout feature. The deal allows customers to browse Walmart's full assortment, including groceries, household essentials, apparel, and third-party seller products, and complete purchases without leaving the ChatGPT interface. CEO Doug McMillon stated that eCommerce shopping experiences "have consisted of a search bar and a long list of item responses" but emphasized this is "about to change" with AI enabling multimedia, personalized, and contextual experiences. The feature is scheduled to launch in fall 2025. Walmart also operates its own AI shopping assistant called Sparky within its app. According to SimilarWeb data, approximately 15% of Walmart's total referral traffic in September originated from ChatGPT, up from 9.5% in August.
- Salesforce: The cloud software giant's stock jumped 5-8% Wednesday after unveiling ambitious long-term financial targets at its Dreamforce conference. The company announced expectations to generate more than $60 billion in revenue by fiscal year 2030, surpassing Wall Street's consensus estimate of $58.37 billion. This forecast excludes anticipated gains from the $8 billion Informatica acquisition expected to close in mid-2026. Salesforce projected organic revenue growth above 10% annually from fiscal 2026 through 2030. The company's Data & AI segment reached $1.2 billion in revenue in Q2, marking a 120% year-over-year increase. The Agentforce AI platform generated $440 million in annual recurring revenue. Alongside growth projections, Salesforce announced a $7 billion share buyback program over the next six months, demonstrating confidence in durable free cash flow. The new long-term framework, called "50 by FY30," aims to achieve a combined 50% total from subscription growth and non-GAAP operating margin.
- Broadcom: Shares soared 9.9% on Monday after announcing a strategic collaboration with OpenAI to deploy 10 gigawatts of custom AI accelerators. Under the multi-year partnership, OpenAI will design the accelerators while Broadcom will handle development and deployment, with targeted rollout starting in the second half of 2026 and completing by the end of 2029. The racks will be scaled entirely with Ethernet and connectivity solutions from Broadcom, meeting surging global AI demand across OpenAI's facilities and partner data centers. The Financial Times estimated the deal could cost between $350 billion and $500 billion. This followed OpenAI's recent announcements of a six-gigawatt chip agreement with AMD and a $100 billion investment from Nvidia with 10 gigawatts of hardware capacity.
- Zions Bancorp and Western Alliance: Regional bank stocks plummeted Thursday after both disclosed problems with fraud-related loans. Zions announced a $50 million charge-off in the third quarter on two commercial and industrial loans extended by its California Bank & Trust subsidiary, with the bank alleging fraud and initiating legal action. Shares fell as much as 6.4% during the session. Western Alliance revealed it filed a lawsuit alleging fraud by a borrower that failed "to provide collateral loans in first position," with shares tumbling as much as 11%. Both banks stated they were victims of fraud on loans to funds that invest in distressed commercial mortgages. The disclosures intensified concerns about potential hidden credit pressures as financial institutions contend with high interest rates and economic instability. Raymond James analysts noted that "the perception of a significant C&I loan to a fraudulent borrower at a bank that typically focuses on smaller balance C&I loans is not favorable and raises doubts about Zions' underwriting practices and risk management strategies." The revelations sent ripples across the regional banking sector, with the broader financial sector experiencing a selloff Friday as fears mounted about credit quality.
Currencies
US Dollar: The dollar strengthened significantly during the week as trade tensions initially eased Monday before reasserting itself by week's end. Fresh buying enthusiasm lifted the dollar higher amid receding trade war jitters, Federal Reserve expectations, and the ongoing government shutdown. Despite Monday's weakness following Trump's conciliatory comments, the greenback flexed its muscles across the board by mid-week as investors sought safe-haven assets.
EUR/USD: The euro dived below $1.1550 during the week as the dollar flexed across the board. After trading at $1.1572 on Monday, the pair experienced downward pressure through mid-week amid dollar strength. By Tuesday, the euro was trading around $1.1605, and by Wednesday, it reached $1.1647. The pair recovered slightly to $1.1695 by Thursday as dollar weakness emerged following Powell's dovish comments. Average rates for October 2025 hovered around $1.1656, with the euro facing pressure from expectations of further Fed monetary policy easing and ongoing concerns about economic growth divergence between the U.S. and Europe.
GBP/USD: Sterling hit $1.3370 on Tuesday after Federal Reserve Chair Jerome Powell's dovish speech boosted rate-cut hopes. The pound benefited from the dollar's weakness following Powell's remarks emphasizing labor market risks and signaling the Fed's willingness to continue cutting rates. UK GDP data was anticipated later in the week, with expectations for August showing a modest gain of 0.1%. The pair's strength reflected a combination of dollar weakness and relative stability in UK economic prospects, though concerns about slower growth continued to weigh on longer-term sentiment.
USD/JPY: The Japanese yen strengthened during the week as a safe-haven asset amid growing credit concerns and market volatility. The yen benefited from its traditional role as a defensive currency during periods of financial stress, particularly as regional bank fraud revelations emerged Thursday and credit fears intensified Friday.
Commodities
Gold: Gold prices went nuclear during the week, surging from fresh record levels above $4,080 early in the week to smash through $4,380 by Friday. The precious metal hit its 45th new all-time high of 2025, with the move from $3,500 to $4,000 taking just 36 days. Gold's performance in 2025 has been compared to 1979 from an annual perspective, marking its strongest performance in a calendar year since then with a 51% year-to-date gain. The surge was fueled by strong investment demand amid geopolitical tensions, dollar weakness, Fed rate-cut expectations, and fears of equity market corrections. Credit concerns that emerged Thursday with regional bank fraud disclosures intensified safe-haven flows into gold. Continued central bank buying helped drive demand, with physically backed gold ETFs adding 634 tonnes year-to-date, bringing total holdings to 3,857 tonnes, just 2% below the November 2020 peak. The rapid price increase—averaging 50 basis points per day from $3,500 to $4,000—reflected the intensity of demand as institutions, retail traders, consumers, and central banks all piled into the yellow metal amid continuing global uncertainty.
Oil: Oil prices experienced moderate movements during the week, with gains limited by various factors. The ongoing Israel-Gaza ceasefire tempered upward pressure, though geopolitical tensions in the Middle East continued to provide some support. United States Oil trading reflected broader energy market dynamics as traders balanced supply concerns against demand outlook in an uncertain economic environment.
Silver: Silver futures surged dramatically Monday, rising 6.8% to reach a historic $50.13 per troy ounce, marking a new record high. The white metal benefited from tight supply conditions and strong safe-haven demand that paralleled gold's rally, with investors seeking precious metals exposure across the board.
Cryptocurrencies
Bitcoin: Bitcoin experienced dramatic volatility throughout the week. Monday saw a powerful 6% rebound as prices surged near $115,000 following Trump's softened stance on China, recovering from Friday's brutal liquidation event that wiped out $19 billion in leveraged positions across 1.6 million traders. The chaos had been triggered by Trump's announcement of 100% tariffs on Chinese imports, causing Bitcoin to plunge more than 10% to below $105,000 within 30 minutes. Ethereum dropped more than 12% to around $3,500 during the Friday selloff. However, by Friday of the current week, the selloff worsened as credit fears sparked a global pullback from risk assets. Bitcoin shed more than 3% in Friday's early session, floating below $105,000 for the first time since July. Zoomed out, Bitcoin had erased 17% from its record high of $126,000 hit just ten days earlier. The entire crypto space retreated as traders dumped risk assets following revelations about regional bank fraud. On-chain data sparked suspicious chatter about potential insider trading during Friday's earlier collapse, with several whale wallets reportedly opening large leveraged short positions minutes before Trump's tariff announcement, reaping hundreds of millions in profits. One trading account turned a profit of $192 million by shorting Bitcoin, while another pocketed $89 million by shorting Ethereum, fueling speculation about advance leaks.
Ethereum: Ethereum struggled to hold above $4,000 throughout the week as the 100-day moving average capped momentum. After Monday's 20% surge to $4,200 following Trump's China comments, the second-largest cryptocurrency faced resistance and showed relative weakness. By mid-week, Ethereum was battling to maintain the $4,000 level, and Friday's broader risk-off sentiment pushed prices lower as credit concerns dominated market psychology. The technical picture showed Ethereum facing difficulty breaking through key resistance levels despite the overall recovery in crypto markets early in the week.
Economic Indicators and Policy Developments
Federal Reserve Policy: Fed Chair Jerome Powell delivered a significant speech Tuesday before the National Association for Business Economics in Philadelphia, providing the strongest hints yet that rate cuts would continue through year-end. Powell acknowledged rising "downside risks to unemployment" in a clearly dovish signal that the central bank is preparing to ease monetary policy further. He emphasized that "holding rates higher presents risks to the job market" and noted that "job creation is below trend given the pace of economic growth." Powell indicated that despite the government shutdown cutting off official economic data, "the outlook for employment and inflation does not appear to have changed much since our September meeting," when the Fed reduced its key rate for the first time this year. Fed officials at the September meeting forecast the central bank would reduce rates twice more in 2025 and once in 2026. Powell also discussed the Fed's quantitative tightening program, suggesting the central bank is nearing a point where it will stop reducing the size of its bond holdings, stating "we may reach that point in the coming months." Investors priced in with near certainty that the Fed would cut rates by 25 basis points during the October 28-29 meeting, according to the CME FedWatch tool. Fed Governor Christopher Waller echoed this sentiment Thursday, saying he's on board with another rate cut later in October because of mixed readings on the job market.
Government Shutdown: The U.S. government shutdown entered its 17th day by Friday, October 17, having begun on October 1 after Republicans and Democrats failed to reach a funding agreement. The shutdown continued to block the release of critical economic data from federal agencies including the Bureau of Labor Statistics, Bureau of Economic Analysis, and Census Bureau, depriving policymakers and investors of key insights into the job market, inflation trends, consumer spending, and business investment. Economists raised alarms that October data might not just be postponed but could potentially be omitted altogether if the shutdown continues, creating a gap in future historical analyses. Treasury Secretary Scott Bessent indicated Wednesday that the shutdown could cost the U.S. economy $15 billion per week and is increasingly becoming an impediment to economic activity. The main disagreement centers on whether to extend Affordable Care Act subsidies, with Democrats and Republicans at an impasse. President Trump warned of program cuts and layoffs if the shutdown continues. The absence of data forced the Fed and market participants to rely on private-sector reports and anecdotal evidence for economic assessment.
US-China Trade Relations: Trade tensions dominated the week's narrative, with President Trump executing a dramatic policy reversal Monday. After announcing Friday that he would impose an additional 100% tariff on Chinese imports (on top of existing 30% tariffs) starting November 1 and threatening export controls on critical software, Trump softened his stance Sunday and Monday, posting "Don't worry about China, it will all be fine!" on Truth Social. He suggested Chinese President Xi Jinping "just had a bad moment" and emphasized "The U.S.A. wants to help China, not hurt it!!!" Vice President JD Vance indicated that while the U.S. holds leverage, "Donald Trump is always willing to be a negotiator." Treasury Secretary Scott Bessent suggested discussions between the two nations would occur in upcoming weeks and that the proposed tariff increase may not be necessary. However, by Friday, Trump acknowledged the high tariff levels were "not sustainable," stating "It probably is not sustainable—you know it could be, but they forced me to do that." China accused the U.S. Thursday of inciting "panic" regarding Beijing's export restrictions on rare earth materials. The tensions stemmed from Beijing's sweeping new controls on rare earth exports announced via "Announcement No. 62 of 2025," requiring foreign entities to obtain government approval to export products containing even minute quantities of rare earth elements. Trump and Xi are expected to meet later this month, with both sides implementing new port fees on each other's vessels during the week.
Market Outlook
As markets head into the final week of October, investors face a complex landscape of crosscurrents that will shape near-term direction:
Earnings Season Momentum: With Q3 earnings season now in full swing following strong results from major banks, the focus shifts to how broadly strength extends across sectors. Technology companies, particularly those with AI exposure, will be closely watched for guidance on sustainable growth trajectories. The market's ability to sustain recent gains depends heavily on whether corporate results can justify elevated valuations amid economic uncertainty.
Credit Quality Concerns: The regional bank fraud revelations that emerged Thursday have raised questions about broader credit quality across the financial system. Investors will scrutinize upcoming bank earnings for any signs of deteriorating loan books or hidden exposure to problematic borrowers. JPMorgan CEO Jamie Dimon's warning that "when you see one cockroach, there are more" has market participants on alert for additional disclosures. The specter of 2023's regional banking crisis, sparked by Silicon Valley Bank's failure, looms in investors' minds.
Federal Reserve Path: With the October 28-29 Fed meeting approaching, markets are pricing in virtual certainty of a 25-basis-point rate cut. However, the ongoing government shutdown complicates the Fed's data-dependent approach, forcing policymakers to rely on incomplete information. The Bureau of Labor Statistics postponed the September CPI release to October 24, giving Fed officials a chance to review inflation data before their decision. Future rate-cut expectations for December and beyond will depend on labor market trends and whether inflation continues moderating despite tariff-related pressures.
Trade Policy Uncertainty: While Trump's Monday reversal on China tariffs provided temporary relief, Friday's acknowledgment that 100% tariff levels are "not sustainable" creates ongoing uncertainty. The planned meeting between Trump and Xi later in October could prove pivotal, with China's rare earth export controls providing Beijing significant leverage. Markets remain hypersensitive to trade headlines, as evidenced by the violent swings between Friday's selloff and Monday's surge. Any escalation or de-escalation in US-China tensions will drive near-term volatility.
Safe-Haven Dynamics: Gold's parabolic rise to $4,380 reflects deep-seated anxiety about multiple risk factors—geopolitical tensions, credit concerns, monetary policy uncertainty, and elevated equity valuations. While short-term technical indicators suggest an overbought market that may face profit-taking, the strategic foundation for gold demand remains robust. A diverse investor base, secular dollar weakness, persistent policy uncertainty, and potential recession risks continue supporting long-term demand. Gold ETF holdings at 3,857 tonnes remain 2% below the November 2020 peak, suggesting room for further accumulation despite the rapid price advance.
Crypto Market Fragility: Bitcoin's 17% decline from its $126,000 record high just 10 days prior, combined with the $19 billion liquidation event, underscores the crypto market's vulnerability to macro shocks and leverage unwinding. The allegations of insider trading surrounding large short positions opened before Trump's tariff announcement add another layer of concern about market integrity. Crypto's correlation with risk assets suggests further weakness if credit concerns intensify or if the Fed signals a slower pace of easing than markets anticipate.
Data Vacuum Risks: The prolonged government shutdown creates an information vacuum that increases the risk of policy errors and misallocated capital. Without reliable employment, inflation, and GDP data, market participants are flying blind through a turbulent environment. If the shutdown extends beyond October, the absence of critical economic indicators could exacerbate volatility as investors react to incomplete information and conflicting signals.
Technical Considerations: The S&P 500's ability to recover swiftly Monday after Friday's selloff demonstrates underlying resilience, but the failure to hold gains through week's end raises questions about sustainability. Key technical levels will be tested as markets digest the implications of credit concerns alongside strong corporate earnings. The VIX's elevated readings reflect heightened uncertainty, and any breakdown in market breadth could trigger more significant corrective pressure.
The week ahead will test whether markets can maintain their optimistic stance in the face of accumulating risks, or whether the credit concerns, trade uncertainty, and data vacuum force a more defensive posture as investors navigate the final stretch of 2025's tumultuous fourth quarter.