North American Markets Cap October on a High Note

(SmallCap Network – Oct. 31, 2025)

Tech Earnings Power U.S. Stock Rally

Wall Street closed out October with solid gains, driven by blockbuster tech earnings and continued enthusiasm for artificial intelligence. The Nasdaq Composite jumped 1.08% on Friday to 23,835, leading major indicesreuters.com. Mega-cap tech stocks spearheaded the advance: Amazon.com surged over 10% after reporting its fastest cloud revenue growth in nearly three yearsreuters.com, and Apple Inc. hit an intraday record after topping forecasts and issuing upbeat holiday guidance (though Apple shares ended the day down 0.3% amid some profit-taking)reuters.com. The strong results from these “Magnificent Seven” giants eased worries about stretched valuations and showed that “the AI narrative is alive and well” across the tech sectorreuters.com. As Jake Seltz of Allspring Global Investments observed, there remains “strong demand for cloud computing and not enough capacity,” with companies pouring capital into AI data centersreuters.com. This optimism around artificial intelligence helped fuel a historic equity run: the S&P 500 rose 0.56% Friday to 6,860.64reuters.com, bouncing back from a mid-week dip and capping its seventh consecutive monthly gainreuters.com. The Dow Jones Industrial Average added 0.16% to 47,597, also advancing for a third straight weekreuters.com.

Not all tech news was rosy – earlier in the week, earnings stumbles from Meta Platforms and Microsoft triggered a bout of volatility, with Meta’s stock plunging 11% on a weak outlook and Microsoft falling 3% after its cloud growth disappointedinvestopedia.com. Those setbacks briefly halted the market’s momentum on Thursday. However, Amazon’s and Apple’s stellar reports quickly turned sentiment around heading into Fridayinvestopedia.cominvestopedia.com. Other sectors joined the rally as well. Notably, semiconductors and cloud-computing suppliers got a boost from Amazon’s upbeat cloud forecast – for example, Western Digital leapt 6% after highlighting robust AI-driven demand for data storageainvest.comainvest.com. Even the energy sector contributed: Chevron’s stock jumped over 3% after its results, helping lift the S&P 500 Energy group, while ExxonMobil ticked up modestlyinvestopedia.com. In contrast, defensive areas like utilities lagged, and a few earnings losers were punished – Newell Brands, for instance, plunged 25% after slashing its outlook amid tariff costsinvestopedia.cominvestopedia.com. Overall, advancers led decliners on U.S. exchanges, and the CBOE VIX volatility index retreated near 17, reflecting a calmer mood on Wall Streetstonex.com.

Small-Cap Stocks Underperform Larger Peers

While blue chips and tech giants grabbed the headlines, small-cap stocks had a more subdued session. The Russell 2000– a benchmark for U.S. small-cap companies – struggled to keep pace and was roughly flat by the close, trailing the broader market’s uptick. In early trading, the Russell 2000 actually dipped about 0.3% even as the Nasdaq and S&P surged, highlighting the “K-shaped” nature of the rallyainvest.com. Investors continued to favor the biggest growth names over smaller and mid-sized companies. Market breadth has improved from earlier in the year, but remains a concern; analysts note that a handful of heavyweight tech stocks account for an outsized share of 2025’s gainsainvest.com. “We’ve seen profit margins rising for the Magnificent Seven while slipping for the rest,” observed one strategist, underscoring that the market’s resilience is being driven by a narrow group of winnersainvest.com.

In Canada, the small-cap segment showed a similar pattern. The S&P/TSX Venture Composite, which tracks micro-cap and venture stocks, continued to lag behind its large-cap counterpart. After a strong summer, Canadian small-caps have lost some momentum amid choppy commodity prices. By late October the TSX Venture index was trading below its early-month highs, reflecting weakness in junior mining and technology names. For example, on Friday several smaller gold miners on the TSX Venture, like Perpetua and First Majestic Silver, fell 2-4% as precious metals pulled backnasdaq.com. Overall, small-cap sentiment remains cautious – these stocks are “having a good year, but not outperforming the S&P 500,” as noted by Morningstar analystsmorningstar.com. Still, any broadening of the rally or pickup in risk appetite could quickly spark catch-up gains in the beaten-down small-cap tier.

Fed Rate Cuts Tempered by Hawkish Signals

Macroeconomic news played a key background role in Friday’s trading. Earlier this week, the Federal Reserve cut interest rates by 0.25% – its second rate cut this year – aiming to support an economy facing a clouded outlook. However, Fed Chair Jerome Powell struck a cautious tone in his press conference, “cooling market expectations of another rate cut in December”stonex.com. In fact, two Fed officials dissented on the October policy decision (one wanted no cut, another wanted a bigger cut), underscoring divisions over how much more stimulus is neededstonex.com. Subsequent comments from regional Fed presidents reinforced the hawkish tilt: Kansas City Fed President Jeffrey Schmid said he voted against the cut due to persistent inflation pressures, and Dallas Fed President Lorie Logan argued the Fed “should not have cut… and should not do so again in December”reuters.comreuters.com. These remarks boosted the U.S. dollarindex to about 99.8, a three-month highinvestopedia.comreuters.com, and put modest upward pressure on short-term bond yields. The benchmark 10-year Treasury yield held near 4.08%, little changed on the dayreuters.com after an initial post-Fed spike eased.

Investors also digested an ongoing U.S. government shutdown, now in its 31st day with no budget deal yet passedstonex.com. The lack of fresh federal economic data due to the shutdown has left markets “flying blind” to some extentstonex.com. Nonetheless, private indicators painted a mixed picture: consumer spending and jobs data have slowed somewhat, but not sharply enough to suggest a recession. In Canada, new GDP figures showed an economic contraction of 0.3% in August, adding evidence of a domestic slowdownreuters.comreuters.com. On the inflation front, price pressures are moderating – eurozone data out Friday was benign, and early-October indicators show Mexico’s inflationeasing as wellreuters.com. Taken together, these signals have strengthened the case that central banks may pause further easing. Powell emphasized that future Fed moves will be data-dependent, and in Canada the central bank hinted it is likely done cutting for now after delivering four rate reductions this yearreuters.com. The prospect of a “lower-for-longer” rate environment – but not much lower than today – has kept equity investors confident enough to continue buying stocks, while also imposing some discipline on the most speculative corners of the market.

TSX Little Changed as Oil and Gold Swing

North of the border, Canadian stocks ended virtually flat on Friday, wrapping up a choppy week. The S&P/TSX Composite Index closed at approximately 30,187, up just 0.03% from Thursday’s finish (and roughly +0.5% for the full month of October after six straight monthly advances)reuters.comreuters.com. The session was a microcosm of recent cross-currents in Toronto: the TSX climbed to an intraday record high of 30,315 in the morning, boosted by strong U.S. tech earnings and a rally in oil prices, but then gave back gains midday as resource stocks turned downwardnasdaq.com. Materials and mining shares were notable laggards. After gold hit an all-time high above $4,000/oz this week, some profit-taking set in – gold futures hovered around $4,020 on Fridayinvestopedia.com. Major gold producers like B2Gold and Kinross dropped 3-8% in Toronto tradingnasdaq.com, weighing on the TSX’s materials sector. On the flip side, the energy sector provided support. Crude oil rebounded off lows, with U.S. WTI crude settling around $60.74 a barrelreuters.com. Canadian oil & gas names rose in sympathy – for instance, Baytex Energy jumped nearly 5%, and several mid-cap oil producers gained 1-3%nasdaq.com.

Another key factor for Canada was the currency. The Canadian dollar (“loonie”) continued to weaken, ending at C$1.402 per USD (~71.3 U.S. cents) after sliding 0.7% over Octoberreuters.comreuters.com. A softer loonie tends to help exporters and the TSX’s many global commodity firms. “We are not surprised to see members of the TSX index continue to perform well… our breadth is good, [and] our dollar being on the weaker side… is inversely correlated to the benchmark’s performance,” noted Sid Mokhtari, a chief market technician at CIBCreuters.com. Indeed, the weaker currency and a dovish Bank of Canada have underpinned Canadian stocks – the BoC cut its policy rate to a three-year low of 2.25% on Wednesdayreuters.com and signaled a high bar for any further cutsreuters.com. Lower rates helped interest-sensitive sectors: the TSX’s rate-sensitive utility and real estate stocks saw modest gains Friday, and high-dividend sectors like telecoms benefited from investors seeking yield. However, financials were mixed as falling loan margins offset optimism about an extended economic cyclereuters.comreuters.com. Overall, Canada’s market sentiment remains balanced – supportive monetary conditions and firm commodity prices are tailwinds, even as the domestic economy grapples with stagnating growth in late summerreuters.com.

Mexico’s IPC Flirts with Record Territory

Mexican equities have quietly notched impressive gains as well. The S&P/BMV IPC, Mexico’s flagship index, is trading near all-time highs after a strong October. Earlier in the week, the IPC jumped over 1.5% in one session to a record around 63,190 points, powered by big moves in stocks like Cemex (which surged 10% to a five-year high on robust earnings)indopremier.comindopremier.com. That rally was briefly interrupted on Thursday when the IPC slipped 0.7%tradingeconomics.com, but by Friday the index stabilized and was on track to finish the month with a slight gain. Supportive domestic policy has been a catalyst: Mexico’s central bank (Banxico) cut interest rates again in October – its tenth consecutive rate cut, bringing the benchmark rate down to 7.50%capitaleconomics.com. Easing financial conditions, alongside cooling inflation, have bolstered local investor confidence. Additionally, Mexico’s market drew optimism from global developments, including signs of a U.S.–China trade truce. A tentative trade agreement announced by Washington and Beijing averted a new round of tariffs that was set to hit in Novemberstonex.comstonex.com. This de-escalation in trade tensions bodes well for export-oriented emerging markets like Mexico. The Mexican peso held steady around 18.4 per U.S. dollar, even as the U.S. Fed’s hawkish stance lifted the greenback broadlyindopremier.com.

By sector, Mexico’s October gains were broad-based. Cyclical industries led the charge: industrial conglomerates and consumer goods companies rallied stronglyindopremier.com. Along with Cemex’s double-digit jump, media giant Grupo Televisa climbed ~10% this week, and bakery leader Grupo Bimbo rose 6%, reflecting robust earnings and consumer demandindopremier.comindopremier.com. Market breadth was solid – on the record-setting day, advancers outnumbered decliners 136 to 112 on the Bolsaindopremier.com. The strength of Mexican equities this year has been notable: the IPC has gained roughly 23% year-to-date (in local currency terms)spglobal.com, outperforming many global peers. As October ends, Mexico’s outlook remains constructive. Analysts point to the country’s attractive valuations and benefits from “near-shoring” of manufacturing. However, some caution is warranted given the rapid run-up – any signs of U.S. slowdown or global risk-off could spur volatility in Mexican stocks. For now, though, Mexico is riding the same wave of risk appetite that has lifted markets worldwide.

Market Sentiment: Cautious Optimism into Year-End

With Halloween trading in the books, North American markets are showing a cautiously optimistic tone. The major U.S. and Canadian indices all posted healthy October gains – the S&P 500 and Dow rose more than 2% for the month, the Nasdaq jumped over 5%, and Toronto’s TSX notched its sixth straight monthly advancereuters.comfinance.yahoo.com. This momentum reflects resilient corporate earnings (over 80% of S&P companies reporting so far beat profit estimates) and hopes that central banks’ supportive policies will extend the economic expansion. At the same time, investors remain mindful of risks. The rally’s narrow leadership by a few tech behemoths and the underperformance of small-caps show that not all areas of the market are participating equally. Geopolitical news is a wildcard: this week oil prices spiked on reports the U.S. was weighing military strikes on Venezuela, only to retreat after President Trump denied those plansbloomberg.com. And in Washington, the protracted budget standoff and looming 2024 election inject uncertainty into the outlook.

Still, as October concludes, the bulls have the upper hand. Volatility is relatively low, credit markets are stable, and global equities just marked a seventh consecutive month of gains – the longest streak since 2021reuters.com. “Talk is better than not talking,” one veteran strategist said of the recent U.S.-China trade détente, capturing the prevailing sentiment that worst-case scenarios (from trade wars to recessions) have been avoided for nowstonex.comstonex.com. The SmallCap Network (SCN) editorial team notes that markets are heading into the final two months of 2025 with a favorable backdrop: easing inflation, peaking interest rates, and solid earnings could form a “Goldilocks” scenario. Of course, whether this “most hated rally” can sustain its pace is the question on every investor’s mindmorningstar.com. For the moment, though, the ghosts and goblins of October have left the stage, and North American stocks are treating investors to more gains rather than tricks. The coming weeks – with more earnings, holiday retail data, and central bank meetings – will determine if this year’s rally has yet another leg higher into year-end.

Sources: Bloombergbloomberg.combloomberg.com; Reutersreuters.comreuters.comreuters.comnasdaq.comreuters.comreuters.com; CNBC; MarketWatch; Yahoo Finance.