October Observations
Still Climbing
Global equities extended their rally in October, with the MSCI ACWI up 2.2% as developed and emerging markets advanced. Korea led all markets with a 19.9% surge, powered by semiconductors and AI-linked optimism. U.S. equities rose again (S&P 500 up 2.3% and Russell 2000 up 1.8%), with gains driven by Tech alongside narrow market breadth as mega-caps outperformed. Strong Q3 earnings and cooler-than-expected inflation data helped offset uncertainty from the government shutdown. Bonds were mixed as investors balanced moderating inflation against signs of growth resilience, while real assets were mostly lower after September’s strength.
Fed Cuts Rates Again, Tempers December Expectations
The Fed delivered another 25-basis-point cut in October, as expected, and announced the end of its balance sheet runoff to stabilize funding markets. While inflation remains above target, policymakers noted that risks continue to tilt toward the labor side of the mandate, supporting a continued shift toward neutral policy. The decision drew two dissents, with Governor Miran favoring a larger move and Kansas City’s Schmid preferring no cut, underscoring divisions within the committee. Chair Powell paired the move with a firm reminder that a December cut is “not a forgone conclusion,” sending yields higher as markets repriced rate expectations.
Can’t Spend Enough
A series of OpenAI deals were announced over the month, including an updated partnership with Microsoft, investments from NVIDIA, and chip agreements with AMD, Qualcomm, and Amazon. Overall, AI spending kept climbing as Amazon, Google, Microsoft, and Meta all reported Q3 CAPEX above expectations and raised forward guidance. Investors rewarded cloud-heavy firms for strong AI-driven growth, while Meta sold off on concerns over debt-funded spending and uncertainty over the return on their AI investment.
Asset Class Valuations – 10.31.2025*
Asset Manager Commentary
U.S. Small Cap Value Manager
Extreme speculation continues to favor unprofitable small cap companies, largely driven by AI euphoria. A case in point is Oklo Inc., a nuclear fission company in the Russell 2000 Value Index whose market cap topped $25 billion in October despite generating no revenue since its 2021 IPO.
High Yield Manager
With private credit now competing directly with traditional banks, smaller companies have easier access to debt financing, reducing the alpha potential for high yield managers in this segment of the market. The small-company trade is unlikely to disappear, but current market conditions offer limited tactical opportunity.
Private Equity Manager
Risk asset euphoria has been concentrated in public markets, driven by multiple expansion and mega-cap tech dominance. Private markets, by contrast, have seen subdued valuations amid limited exits, weak fundraising, and the overhang of high-priced deals from the low-rate era. While many private companies remain challenged, relative valuations look attractive versus public peers.
Chart of the Month
Investment in artificial intelligence has surged at Amazon, Google, Microsoft, and Meta. Capital expenditures for these four companies are projected to exceed $350 billion in 2025 and reach $600 billion by 2029. So far, these investments have been financed primarily through profits, though debt funding may be required for future spending.
Disclosures
© 2025 Advisory services offered by Moneta Group Investment Advisors, LLC, (“MGIA”) an investment adviser registered with the Securities and Exchange Commission (“SEC”). MGIA is a wholly owned subsidiary of Moneta Group, LLC. Registration as an investment adviser does not imply a certain level of skill or training. The information contained herein is for informational purposes only, is not intended to be comprehensive or exclusive, and is based on materials deemed reliable, but the accuracy of which has not been verified.
Trademarks and copyrights of materials referenced herein are the property of their respective owners. Index returns reflect total return, assuming reinvestment of dividends and interest. The returns do not reflect the effect of taxes and/or fees that an investor would incur. Examples contained herein are for illustrative purposes only based on generic assumptions. Given the dynamic nature of the subject matter and the environment in which this communication was written, the information contained herein is subject to change. This is not an offer to sell or buy securities, nor does it represent any specific recommendation. You should consult with an appropriately credentialed professional before making any financial, investment, tax or legal decision. An index is an unmanaged portfolio of specified securities and does not reflect any initial or ongoing expenses nor can it be invested in directly. Past performance is not indicative of future returns. All investments are subject to a risk of loss. Diversification and strategic asset allocation do not assure profit or protect against loss in declining markets. These materials do not take into consideration your personal circumstances, financial or otherwise.
Sources
Morningstar Direct, Bloomberg as of 10/31/2025
Manager comments come from discussions with various asset managers and are broad commentary on sectors and not be considered recommendations by any asset manager. These comments do not necessarily reflect strategy allocations or the view or opinion of MGIA or Moneta Group .
Definitions
The S&P 500 Index is a free-float capitalization-weighted index of the prices of approximately 500 large-cap common stocks actively traded in the United States.
The NASDAQ Composite Index is a market capitalization weighted index with more than 3000 common equities listed on the NASDAQ Stock Market.
The NASDAQ 100 Index is a modified capitalization-weighted index of the 100 largest and most active non-financial domestic and international issues listed on the NASDAQ..
The Russell 1000® Index is an index of 1000 issues representative of the U.S. large capitalization securities market.
The Russell 1000® Growth Index measures the performance of the large-cap growth segment of the U.S. equity universe. It includes those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values.
The Russell 1000® Value Index measures the performance of those Russell 1000 Index securities with lower price-to-book ratios and lower forecasted growth values, representative of U.S. Securities exhibiting value characteristics.
The Russell 2000® Index is an index of 2000 issues representative of the U.S. small capitalization securities market.
The MSCI EAFE Index is a free float-adjusted market capitalization index designed to measure the equity market performance of developed markets, excluding the U.S. and Canada.
The MSCI Emerging Markets Index is a float-adjusted market capitalization index that consists of indices in 21 emerging economies.
Bloomberg U.S. Treasury Bond Index includes public obligations of the US Treasury, i.e. US government bonds. Certain Treasury bills are excluded by a maturity constraint. In addition, certain special issues, such as state and local government series bonds (SLGs), as well as U.S. Treasury TIPS, are excluded.
The Bloomberg U.S. Municipal Index covers the USD-denominated long-term tax exempt bond market. It includes general obligation and revenue bonds, which both can be pre-refunded years later and get reclassified as such.
The Bloomberg U.S. Aggregate Bond Index is an index, with income reinvested, generally representative of intermediate-term government bonds, investment grade corporate debt securities and mortgage-backed securities.
The Bloomberg US Corporate Bond Index measures the investment grade, fixed-rate, taxable corporate bond market. It includes USD-denominated securities publicly issued by US and non-US industrial, utility and financial issuers.
The Bloomberg US Corporate High Yield Bond Index measures the USD-denominated, high yield, fixed-rate corporate bond market. Securities are classified as high yield if the middle rating of Moody’s, Fitch and S&P is Ba1/BB+/BB+ or below. Bonds from issuers with an emerging markets country of risk, based on the indices’ EM country definition, are excluded.
The US Dollar Index measures the US dollar against six global currencies: the euro, Swiss franc, Japanese yen, Canadian dollar, British pound, and Swedish krona.
The FTSE Nareit All Equity REITs Index is a free-float adjusted, market capitalization-weighted index of U.S. equity REITs. Constituents of the index include all tax-qualified REITs with more than 50 percent of total assets in qualifying real estate assets other than mortgages secured by real property.
The S&P Global Listed Infrastructure index measures the performance of global companies that are engaged in infrastructure and related operations. It provides liquid and tradable exposure to 75 companies from around the world that represent the listed infrastructure universe. To create diversified exposure, the index includes three distinct infrastructure clusters: utilities, transportation and energy.
Brent crude is the most traded of all of the oil benchmarks, and is defined as crude mostly drilled from the North Sea oilfields: Brent, Forties, Oseberg and Ekofisk (collectively known as BFOE).
The Dow Jones Commodity Index Gold is designed to track the gold market through futures contracts.
The ICE BofA Option-Adjusted Spreads (OASs) are the calculated spreads between a computed OAS index of all bonds in a given rating category and a spot Treasury curve. An OAS index is constructed using each constituent bond’s OAS, weighted by market capitalization. The Corporate Master OAS uses an index of bonds that are considered investment grade (those rated BBB or better). When the last calendar day of the month takes place on the weekend, weekend observations will occur as a result of month ending accrued interest adjustments.
The ICE BofA Option-Adjusted Spreads (OASs) are the calculated spreads between a computed OAS index of all bonds in a given rating category and a spot Treasury curve. An OAS index is constructed using each constituent bond’s OAS, weighted by market capitalization. The ICE BofA High Yield Master II OAS uses an index of bonds that are below investment grade (those rated BB or below).
