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Stocks Hit Fresh Highs Ahead of the Fed As Earnings Pump Optimism: Stock Market Today

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  Published in Stocks and Investing on Friday, October 31st 2025 at 6:43 GMT by Kiplinger
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Earnings‑Driven Momentum

A headline‑making driver of the rally was the fourth‑quarter earnings season. The Technology sector, in particular, delivered a composite earnings‑per‑share (EPS) growth of 34 % YoY, outpacing the broader market’s 12 % rise. Apple (AAPL) reported quarterly revenue of $94.8 billion, beating consensus by $5.1 billion, while net income surged 22 % to $23.8 billion. The company cited stronger sales of the iPhone 15 and a healthy services segment. Microsoft (MSFT) posted revenue of $56.2 billion, up 15 % YoY, and adjusted EPS of $2.40, eclipsing expectations by $0.05. The software giant’s cloud platform, Azure, posted a 28 % growth in revenue, signaling sustained demand from enterprises.

Amazon (AMZN) added $2.3 billion to its net income, a 27 % YoY increase, driven by a rebound in advertising revenue and a 6 % lift in subscription services. Facebook’s parent Meta Platforms (META) posted quarterly revenue of $28.1 billion, up 18 % YoY, buoyed by a 12 % rise in paid user growth. Google’s parent Alphabet (GOOG) saw revenue rise 19 % YoY to $84.6 billion, with the advertising segment reporting a 21 % growth. These results were reinforced by a broader trend of earnings season momentum that carried even to non‑tech names such as General Motors (GM) and Boeing (BA), which reported solid results in transportation and defense.

Federal Reserve Expectations

The market’s sentiment is also influenced by expectations around the Fed’s policy stance. The Federal Reserve’s latest meeting minutes, released last week, indicated that policymakers view the current economic data as a sign that inflationary pressures are moderating. Analysts interpret this as a potential cue for the Fed to delay rate hikes or even cut rates later in the year. The market’s Fed‑watcher indicator, which tracks the probability of a 25‑basis‑point cut, rose from 30 % to 42 % after the earnings wave, highlighting growing optimism that the bank may pivot.

At the same time, the US Treasury market remains subdued, with the 10‑year yield hovering around 3.8 %. The relative stability in yields has supported risk‑taking in equities, as investors seek higher returns in the corporate sector. Meanwhile, inflation data remains a source of uncertainty. The Consumer Price Index (CPI) for March showed a 5.7 % YoY increase, the lowest reading in more than a year, but still above the Fed’s 2 % target. The market appears to be pricing in a scenario where the Fed might accommodate the ongoing inflationary tailwinds, at least temporarily.

Corporate‑Sector Highlights

Beyond tech, the energy and industrial sectors also contributed to the rally. Exxon Mobil (XOM) posted quarterly earnings of $7.5 billion, up 20 % YoY, driven by higher oil and gas prices. The energy conglomerate’s stock gained 2.7 % in the session. On the industrial front, Caterpillar (CAT) reported net income of $2.8 billion, a 17 % rise, reflecting stronger demand for construction equipment in the United States and China.

Financials also saw positive movement, with JPMorgan Chase (JPM) posting a 5 % rise in EPS, citing higher loan growth and fee income. The bank’s stock jumped 3.1 % after the results, echoing the market’s belief that rising rates will ultimately boost bank profitability as long as credit quality remains intact.

Market Sentiment and Technicals

On a technical level, the Dow has recently broken out of a long‑term downtrend and is now trading above its 200‑day moving average, a bullish signal for many traders. The S&P 500’s relative strength index (RSI) sits at 57, indicating neither overbought nor oversold conditions. Analysts predict that if the Fed’s stance remains dovish, the bullish momentum could extend into the next trading session.

Investor sentiment, as measured by the CBOE Volatility Index (VIX), has dipped to 15.2, down from 20.8 yesterday, signaling a significant decline in fear in the market. This lower volatility environment has further encouraged investors to tilt toward equities and away from safer haven assets such as U.S. Treasuries.

Looking Ahead

The next few days will be critical as the market digests the Fed’s forthcoming policy statement and watches for any shifts in economic data. Economists are paying close attention to the upcoming U.S. unemployment claims and manufacturing PMI releases, which could provide additional clues about the trajectory of the U.S. economy.

In sum, the market’s surge to fresh highs reflects a confluence of solid earnings performance, easing expectations for aggressive Fed tightening, and a generally favorable macro‑economic backdrop. While uncertainties remain—particularly around inflation dynamics and global supply chain pressures—the current optimism appears grounded in tangible corporate earnings and a broader belief that the Federal Reserve may adopt a more accommodative stance for the foreseeable future.