Markets Stay Defiant as Risks Pile Up 20/10/2025

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Market Wrap

• Markets finished the week on a firmer note, with all major U.S. indexes closing higher except the Russell 2000, as financial stocks steadied after a bout of loan-loss jitters and trade tensions eased. Treasury Secretary Scott Bessent said Friday that relations with China have “de-escalated” and signaled he’s likely to meet with Vice Premier He Lifeng in the coming week. Still, signs of stress are emerging in Europe’s banking sector, hinting the turbulence may be shifting overseas.
• Bitcoin slid toward the $100,000 mark, extending its steep decline as roughly $600 billion in crypto market value has vanished since last week’s rout, according to CoinGecko. Gold and silver retreated from record levels, while two-year Treasury yields edged up from their lowest point since 2022. A Bloomberg–Goldman Sachs analysis of state data showed weekly jobless claims falling, even as the Federal Reserve remains closed amid a prolonged government shutdown that could stretch into Thanksgiving, potentially the longest on record.
• In China, GDP growth slowed to 4.8%, its weakest pace in a year, with investment posting a “rare and alarming” decline. Still, mainland equities advanced, shrugging off the disappointing figures. Looking ahead, U.S. stock futures point higher as investors brace for a busy earnings week, with Netflix, Coca-Cola, Tesla, and Intel among prominent names set to report. The September consumer price index, due Friday, is expected to show inflation remains elevated, data that will carry extra weight given the ongoing blackout from federal agencies.

Markets Stay Defiant as Risks Pile Up

• Markets have plenty to fret about: a government shutdown dragging into record territory, renewed tariff threats from Washington, signs of mounting loan losses, and growing unease in credit markets. Yet U.S. equities remain just 1% off record highs as the bull market quietly marks its third anniversary. Volatility has surged, with the VIX briefly hitting its highest since April before easing, underscoring investor anxiety after a string of conflicting headlines. The Fed’s beige book points to slower economic momentum, while the lack of official data during the shutdown has left traders leaning heavily on earnings calls for clues.
• This week’s sharp swings in financials, triggered by Zions Bancorp’s loan-loss disclosure and Jamie Dimon’s “cockroach” warning, reinforced fears that credit issues may be more widespread. Still, strategists caution against overreacting. “The trend remains your friend,” said StoneX’s Fawad Razaqzada, noting that past selloffs tied to trade flare-ups have quickly reversed. Analysts, including Miller Tabak’s Matthew Maley, warn that cracks in private credit and stretched Big Tech valuations could amplify volatility if earnings disappoint. Interactive Brokers’ Steve Sosnick calls the recent pullback a “healthy release of pressure,” advising investors to use it as a portfolio stress test.

Stocks on the move

• Jefferies (JEF): Shares rebounded 4.2% after Thursday’s 10% plunge. Oppenheimer upgraded the stock to outperform, citing minimal exposure to First Brands.
• CSX Corporation (CSX): The railroad gained 3% after posting better-than-expected earnings of $0.44 a share on $3.59 billion in revenue, topping LSEG estimates.
• Interactive Brokers Group (IBKR): Shares slipped 3% despite beating forecasts with earnings of $0.57 a share on $1.61 billion in revenue, both ahead of consensus.
• Oracle (ORCL): The software giant dropped 7%, surrendering some of Thursday’s rally after confirming a new cloud-computing partnership with Meta.
• AST SpaceMobile (ASTS): Shares fell 6% after more than doubling in the past month. Barclays double-downgraded the stock to underweight from overweight while keeping its $60 price target, according to StreetAccount.

                                     Watchlist: AMD, ASTS, MU, CRWV, RGTI, NVDA, LUNR, ORCL



Key Economic Events:

10:00 am: USD CB Leading Index

Earnings

BMO (Before Market Open): 
CLF      Cleveland Cliffs
SMMT        Summit Therapeutics
AMC (After Market Close): AGNC, ZION


The TEFS Analyst Team wishes you a successful day!