U.S. equities extended their strong 2025 performance, supported by another quarter of earnings that surpassed expectations and a macro backdrop increasingly shaped by Fed easing and stabilizing inflation. International developed markets lagged, but emerging markets continued to benefit from a weaker dollar and improving growth prospects, a trend highlighted in recent Advisor Outlook data showing EM as one of the few regions gaining consensus support. Bonds resumed their historical role as a source of ballast, with correlations turning positive for diversification and fixed income delivering meaningful gains during equity pullbacks.

Markets continued to defy gravity in October, with equities pressing to new highs and volatility staying contained. The optimism around artificial intelligence, improved margins, and lower rates remained powerful drivers. Still, beneath those headline gains, investors are bracing for colder winds. Utilities, healthcare, and consumer staples, the market’s traditional shelters, have become the month’s unlikely leaders, marking their first outperformance since mid-2022.