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Morning Bid: Wall Street gets vertigo

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  Published in Stocks and Investing on Wednesday, November 5th 2025 at 8:40 GMT by reuters.com
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Global Markets View: USA – November 5, 2025

The United States markets opened on a cautious note amid a confluence of domestic and global economic signals that underscored the fragility of the recovery. While the equity indices ended the session slightly higher, the upward momentum was tempered by a steep rise in Treasury yields, a hawkish stance from the Federal Reserve, and a patchwork of corporate earnings that offered mixed reassurances about growth prospects.

Equity Market Performance

The Dow Jones Industrial Average finished 0.4% higher, buoyed by gains in the technology and consumer discretionary sectors. The S&P 500 gained 0.6% and the Nasdaq Composite climbed 0.9%, reflecting optimism around earnings from high‑growth names such as NVIDIA, AMD, and Tesla. However, the rally was not uniform. Defensive staples like utilities and healthcare lagged behind, dragging the broader market in a sideways trade that kept the overall risk premium subdued.

A key driver of the equity performance was the release of third‑quarter earnings for several leading firms. Apple reported a 5% increase in net income, citing a robust holiday season, while Microsoft posted a 7% rise in revenue, driven by its cloud services. In contrast, General Motors and Ford reported narrower margins due to rising component costs, highlighting the supply‑chain pressures that still loom over the automotive sector.

Treasury Yields and the Federal Reserve

The 10‑year Treasury yield touched 4.02% during the day, a significant jump from the 3.67% level at the start of the month. This increase was largely driven by expectations that the Fed will continue tightening to curb inflation. The Fed’s policy meeting minutes, released earlier in the week, confirmed that the committee remains “prepared to keep rates elevated” until price stability is firmly in place. Market analysts point to the likelihood of a 25‑basis‑point hike in December, aligning with the Fed’s current trajectory.

In addition to the 10‑year yield, the 2‑year Treasury rose to 4.38%, setting a steep yield curve that signals heightened expectations for inflation and slower growth. This steepening was also reflected in the futures market, where the 2‑year/10‑year spread widened to 0.35 percentage points, the widest level since 2021.

Currency Movements

The U.S. dollar surged to its strongest level against the euro in three months, reaching a 1‑year high of 1.12 USD/EUR. The dollar’s strength was amplified by the Fed’s hawkish stance and the relative decline in the eurozone’s economic outlook, which saw a contraction in GDP growth forecasts by the ECB. Meanwhile, the yen weakened slightly, falling to 152.4 against the dollar, influenced by Japan’s accommodative monetary policy and a robust domestic recovery.

Global Market Outlook

Europe’s markets displayed a mixed picture. The STOXX Europe 600 dipped 0.8% as investors weighed the ECB’s recent decision to maintain policy rates at 4.25%, while the German DAX fell 1.2% on fears of a slowdown in industrial output. In Asia, the Nikkei 225 and Hang Seng indices closed within a 0.3% range of their previous highs, with the Japanese market benefiting from a surge in technology shares and the Chinese market rallying on government‑backed infrastructure spending.

The global risk sentiment remained cautious, with volatility indices climbing modestly. The VIX rose to 21.5, indicating heightened uncertainty in the markets.

Corporate Earnings Highlights

Beyond the major technology names, several mid‑cap companies delivered noteworthy earnings. Salesforce posted a 12% increase in quarterly revenue, citing a strong demand for its cloud solutions. On the downside, Walmart reported a 2% decline in net income, pointing to a slowdown in consumer spending and higher operating costs.

Investors also took note of the earnings announcements from the energy sector. ExxonMobil and Chevron both surpassed analyst expectations, with Exxon posting a 9% rise in earnings per share and Chevron beating forecasts by 15%. The gains were driven by a surge in oil prices, which rose to $87 per barrel, the highest level since early 2024.

Forward‑Looking Statements

Analysts forecast that the U.S. economy will likely remain on a moderate growth path, with GDP expected to expand by 2.2% in 2025. However, the looming threat of inflationary pressures, especially in the energy and commodity markets, could push the Fed to adopt a more aggressive tightening stance. The consensus among economists is that the markets will need to navigate the delicate balance between growth and inflation for the remainder of the year.

In summary, the U.S. markets experienced a modest gain on a backdrop of rising Treasury yields, a stronger dollar, and a patchwork of corporate earnings. While the equity markets continued to rally, the cautionary tone set by the Fed’s policy outlook and global macroeconomic uncertainties underscored a prudent approach for investors as they weigh the potential risks ahead.