CWS Market Review – October 28, 2025 Crossing Wall Street

CWS Market Review – October 28, 2025

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The S&P 500 broke out to another all-time high today. The index briefly traded above 6,900 for the first time. The market has closed higher seven times in the last eight sessions.

Shares of Nvidia also closed at a record high today. The company is getting close to a market value of $5 trillion. Kevin Gordon points out that semiconductors have gone from a 2% weighting in the S&P 500 in 2013 to a 14% weighting today.

Today is October 28 and this has been an important day in Wall Street history. That’s true for both the bulls and for the bears. Seventeen years ago today, on October 28, 2008, the S&P 500 soared 10.8%. Investors were anticipating a rate cut from the Federal Reserve. That was the market’s second-best day of the last 90 years. The best day came exactly 15 days earlier.

The Financial Crisis was a hectic time, but it wasn’t the worst. That came 96 years ago today, on October 28, 1929, when the S&P 500 plunged 12.3%. (Technically, it wasn’t the S&P 500 back then.) This was the original Black Monday, and it was the worst day in market history until it was surpassed in 1987 by an even blacker Black Monday on October 19, 1987.

Black Monday from 1987 is still the worst day in market history (so far), but 1929 can say that it stands out because of its back-to-back losses. While the S&P 500 lost 12.3% on the 28th, it lost another 10.2% on Tuesday, the 29th. That works out to a two-day loss of 20.9% which is a little worse than the one-day plunge from 1987 (-20.5%).

Here’s an interesting fact you don’t often see here. By April 10, 1930, the S&P 500 had recovered to 25.92. That marked a 14% gain since October 28. After that, the market continued to fall almost nonstop for the next four years.

I’m happy to say that the stock market is in a much better mood this October. The S&P 500 closed at another all-time high today. On Friday, we got a mostly benign inflation report. I’ll have more on that in a bit. Also, the Federal Reserve began its October meeting today. The policy statement will be out tomorrow afternoon, and we can almost certainly expect another rate cut.

Within the stock market, the High Beta names continue to lead the pack. The gap between High Beta and Low Vol sectors has become quite astonishing. Just when you think it can’t get any wider, it quickly does.

Here’s a look at the High Beta and Low Vol ETFs:

Earnings season is largely going well for Wall Street. So far, 29% of S&P 500 companies have reported; 87% have beaten on EPS and 83% have beaten on revenue. Growth is currently tracking at 9.2%. Twelve companies have issued positive guidance and 11 have issued negative. The forward 12-month P/E ratio is 22.7.

September Inflation Was Tame

On Friday, the government finally decided to release the September CPI report. This happened despite the continuing government shutdown. This wasn’t some big-hearted move by Congress or the president. Instead, the Social Security Administration needs the September CPI data so it can calculate the last month of the fiscal year. That impacts the cost-of-living increases for Social Security payments.

The Bureau of Labor Statistics said that consumer prices rose by 0.3% last month. That was 0.1% lower than expected. Over the last year, inflation is running at 3.0%.

The core rate, which excludes food and energy prices, increased by 0.2% last month. That was also 0.1% lower than expected. Over the last year, core inflation is running at 3%.

A 4.1% jump in gasoline prices was the largest contributor to a report that otherwise showed inflation pressures fairly muted. Food prices saw a 0.2% increase. Commodity prices overall rose 0.5%. On an annual basis, energy was up 2.8% and food rose 3.1%.

Within the food index, prices for meat, poultry, fish and eggs surged 5.2% in the past year, while nonalcoholic beverages increased 5.3%. In energy, while prices pushed higher for electricity, up 5.1%, and natural gas, up 11.7%, over the past year, gasoline prices actually fell 0.5% during the period.

Shelter costs, which comprise about one-third of the weighting in the CPI, rose just 0.2% and were up 3.6% from a year ago. Services excluding shelter costs also were 0.2% higher.

New vehicles saw a 0.8% increase, but used car and truck prices fell 0.4%.

The CPI report looks to be the last data we’ll get from the government until the shutdown ends.

The Federal Reserve started its October meeting today. Tomorrow afternoon, the Fed will release its policy statement. It’s all but certain that the Fed will cut rates again. But what happens after that?

That’s still a little cloudy but we’re starting to get some hints. The Fed is likely to cut rates again at its December meeting. After that, the Fed will probably cut rates again in either January or March. That’s still up in the air. There will probably be a few additional rate cuts later in 2026 but it’s hard to say right now. A lot can happen between now and then. Overall, I think President Trump will get the rate cuts he’s looking for.

We’re also going to get a new Chairman of the Federal Reserve in the spring. Treasury Secretary Scott Bessent said that President Trump has narrowed his selection down to five candidates: Fed Governors Christopher Waller and Michelle Bowman, NEC Director Kevin Hassett, former Governor Kevin Warsh and BlackRock executive Rick Rieder. Of those names, Hassett is probably the frontrunner.

American Water Announces Major Deal

On Monday, one of our Buy List stocks announced a major deal. American Water Works (AWK) said it’s merging with Essential Utilities (WTRG) in an all-stock deal. The combined company will be worth about $40 billion.

The boards of both companies have unanimously approved the deal. The combined company will continue to use the name “American Water.”

According to the deal, Essential shareholders will get 0.305 shares of AWK for each share of WTRG they own. That values Essential at a 10% premium from where the stock had been. American Water has increased its dividend for 17 years in a row.

American Water shareholders will own about 69% of the company and Essential shareholders will own about 31%. American Water said it expects to maintain its long-term rate growth target of 7% to 9%.

The companies said the deal creates a more resilient utility with improved credit quality and a strong balance sheet. The companies are aiming to close the deal by Q1 of 2027. There are, of course, regulatory approvals that AWK must get for the deal to go forward.

American Water will report its Q3 earnings tomorrow before the opening bell. Wall Street expects Q3 earnings of $1.88 per share.

That’s all for now. Expect more earnings this week and next. We’ll also have the Fed’s decision tomorrow afternoon. I’ll have more for you in the next issue of CWS Market Review.

– Eddy

Posted by Eddy Elfenbein on October 28th, 2025 at 7:47 pm

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.