Economic Growth Surprises to the Upside
Equity markets rallied last week following a strong U.S. GDP report and easing bond yields. The S&P 500 advanced 2.5%, the NASDAQ gained 2.9%, and the Dow climbed 2.1%.
Third-quarter GDP growth reached 4.9%, far exceeding expectations. Consumer spending and durable goods orders contributed significantly to the upside surprise, reinforcing perceptions of economic strength.
Treasury Yields Pull Back from 5%
After briefly rising above 5% early in the week, the 10-year Treasury yield declined to 4.84%, reducing pressure on equities. The pullback helped stabilize rate-sensitive areas of the market, particularly technology and small-cap stocks.
Bond market volatility continued, but the move lower in yields created room for risk assets to recover following recent weakness.
Sector Rotation Favors Tech and Small Caps
Technology and small-cap names outperformed during the week, while sectors like utilities and healthcare were mixed. International equities showed modest gains, and emerging markets remained rangebound.
Despite some ongoing earnings uncertainty, equity markets appeared to respond positively to signs of continued economic resilience.
“Even with mixed earnings, the market was looking for a catalyst — and a solid GDP report provided one,” said Tony Parish, CIO at Alphastar.
Here are three key investor considerations:
-
Growth Remains a Market Driver
The strong Q3 GDP reading helped ease concerns about a potential slowdown. Economic momentum may continue to support select equity segments, especially cyclicals.
-
Yields Continue to Influence Risk Appetite
The move back below 5% in the 10-year yield lifted market sentiment. Continued yield volatility, however, may still weigh on valuations and fixed income performance.
-
Tech and Small Caps Regain Strength
Recent leadership in tech and small-cap stocks suggests market participants are looking toward growth-oriented sectors again. Monitoring these trends may help guide allocation adjustments.
Final Thoughts
After several weeks of market turbulence, investors welcomed a combination of solid economic data and easing bond market pressures. While risks remain – including geopolitical tension, inflation persistence, and earnings variability – the GDP report provided a near-term boost to sentiment.
As Tony Parish noted:
“Momentum can shift quickly in this environment. Staying disciplined and data-driven is essential.”
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Disclosure:
This blog post is for informational purposes only and should not be considered investment advice. Past performance does not guarantee future results. All data is as of October 27, 2025. Please consult with a qualified financial professional for personalized advice.
Strong GDP and Falling Yields Boost Markets: Week of October 27, 2025
Economic Growth Surprises to the Upside
Equity markets rallied last week following a strong U.S. GDP report and easing bond yields. The S&P 500 advanced 2.5%, the NASDAQ gained 2.9%, and the Dow climbed 2.1%.
Third-quarter GDP growth reached 4.9%, far exceeding expectations. Consumer spending and durable goods orders contributed significantly to the upside surprise, reinforcing perceptions of economic strength.
Treasury Yields Pull Back from 5%
After briefly rising above 5% early in the week, the 10-year Treasury yield declined to 4.84%, reducing pressure on equities. The pullback helped stabilize rate-sensitive areas of the market, particularly technology and small-cap stocks.
Bond market volatility continued, but the move lower in yields created room for risk assets to recover following recent weakness.
Sector Rotation Favors Tech and Small Caps
Technology and small-cap names outperformed during the week, while sectors like utilities and healthcare were mixed. International equities showed modest gains, and emerging markets remained rangebound.
Despite some ongoing earnings uncertainty, equity markets appeared to respond positively to signs of continued economic resilience.
Here are three key investor considerations:
Growth Remains a Market Driver
The strong Q3 GDP reading helped ease concerns about a potential slowdown. Economic momentum may continue to support select equity segments, especially cyclicals.
Yields Continue to Influence Risk Appetite
The move back below 5% in the 10-year yield lifted market sentiment. Continued yield volatility, however, may still weigh on valuations and fixed income performance.
Tech and Small Caps Regain Strength
Recent leadership in tech and small-cap stocks suggests market participants are looking toward growth-oriented sectors again. Monitoring these trends may help guide allocation adjustments.
Final Thoughts
After several weeks of market turbulence, investors welcomed a combination of solid economic data and easing bond market pressures. While risks remain – including geopolitical tension, inflation persistence, and earnings variability – the GDP report provided a near-term boost to sentiment.
As Tony Parish noted:
READ THE FULL REPORT
Disclosure:
This blog post is for informational purposes only and should not be considered investment advice. Past performance does not guarantee future results. All data is as of October 27, 2025. Please consult with a qualified financial professional for personalized advice.