Welcome back to our October recap. We hope you all had a nice Halloween with no tricks and plenty of treats. Speaking for Joel and me, our kids ended up with enough candy to survive the next zombie apocalypse. Naturally, we had to enact the “parent tax” and take a few pieces for ourselves, but not to worry, they still have plenty for themselves.
In this month’s recap, we will cover market performance for October and then cover our topic of the month – The Current Government Shutdown. We’ll get into the impacts and outlook for hopefully finding an offramp to what is now the longest US government shutdown in history. So, with that, let’s dive in.
The Markets in October
October continued the positive momentum in equities, delivering solid gains across most major indices. Investor optimism was fueled by easing inflation pressures, expectations of further rate cuts, and strong corporate earnings, particularly in technology and emerging markets.
The Nasdaq led the way with a 4.7% surge, driven by ongoing enthusiasm for AI-related investments and robust quarterly results from major tech firms. Emerging Markets followed closely with a 4.2% gain, supported by improving economic data and stabilizing currencies. The Dow posted a healthy 2.6% increase, while the S&P added 2.3%, reflecting broad-based strength across large-cap U.S. stocks.
Smaller companies saw more modest gains, with the Russell 2000 up 1.8%, as investors weighed the benefits of lower rates against lingering concerns about growth. Developed International Markets (MSCI EAFE) trailed with a 1.2% return, as mixed economic signals from Europe tempered enthusiasm. Overall, October marked another strong month for equities, reinforcing confidence as markets head into year-end.
US Equity Sectors
October saw mixed results across U.S. sectors, with five of the eleven posting positive returns. Technology once again led the way with a 6.7% gain, supported by strong earnings and continued optimism around AI-driven innovation. Health Care followed with a solid 3.7%, marking another month of recovery as investors rotated back into defensive sectors amid moderating inflation concerns. Utilities also posted a positive return of 2.2%, benefiting from lower interest rate expectations that eased pressure on dividend-paying stocks.
On the downside, Materials were the weakest performer, falling 4.4%, as declining commodity prices and slowing global manufacturing weighed on the sector. Communication slipped 3%, reversing some of September’s gains, while Real Estate and Financials dropped 2.9% and 2.8%, respectively, as higher financing costs and cautious outlooks continued to pressure these interest-rate-sensitive sectors. Overall, October’s sector performance reflected a market still favoring growth and innovation while remaining selective amid shifting macroeconomic conditions.
Bond Performance
Bond markets posted modest gains in October, supported by continued expectations for lower interest rates and steady economic conditions. International bonds led the way, reflecting strength amid stabilizing global currencies and easing inflation abroad. U.S. intermediate-term bonds performed decently as investors maintained demand for high-quality fixed income during a period of monetary policy adjustment.
Shorter-duration bonds lagged behind, as their lower sensitivity to interest rate changes limited their ability to benefit from the broader rally. Overall, October’s results reinforced a cautious but constructive outlook for fixed income, with global exposure providing a slight edge over domestic allocations.
Topic of the Month –The Current U.S. Government Shutdown: Impacts and Outlook
The U.S. federal government officially entered a shutdown on October 1, 2025, after Congress failed to pass funding legislation for the new fiscal year. The impasse stems from deep partisan divisions over federal spending priorities, including healthcare subsidies and foreign aid. Democrats are advocating for the extension of Affordable Care Act subsidies and the reversal of recent Medicaid cuts, while Republicans argue these issues should be addressed separately from core government funding. With no compromise in sight, the shutdown has now surpassed 36 days—making it the longest in U.S. history.
Widespread Disruption Across Federal Services
The effects of the shutdown have been far-reaching. Approximately 900,000 federal employees have been furloughed, and another 2 million are working without pay. While essential services such as Medicare, Medicaid, and TSA operations continue, many federal agencies—including the National Institutes of Health, the Centers for Disease Control and Prevention, and the WIC nutrition program—have experienced partial or full suspensions. National parks, passport processing, and some Social Security administrative functions have also been curtailed, although benefit payments like Social Security and SSI remain unaffected due to their classification as mandatory spending.
Programs funded through discretionary appropriations are bearing the brunt of the shutdown. SNAP (food assistance) funding is running low, and delays in federal loan processing are impacting small businesses and farmers. Air travel has also been affected, with staffing shortages among air traffic controllers contributing to flight delays. The economic toll is mounting, with estimates suggesting the shutdown is costing the U.S. economy up to $30 billion per week. Several states have filed lawsuits over withheld benefits, underscoring the urgency for a resolution.
Economic and Social Consequences
The shutdown’s impact is being felt most acutely by furloughed federal workers, contractors, and families relying on nutrition assistance. While back pay is typically granted after shutdowns end, the current administration has not confirmed whether that tradition will continue, adding to financial uncertainty. The Congressional Budget Office estimates that the shutdown could reduce fourth-quarter GDP growth by up to 2 percentage points, with between $7 billion and $14 billion in economic output permanently lost.
Thanksgiving Travel: A Tipping Point for Congressional Action?
As the shutdown stretches into November, the looming Thanksgiving travel season is emerging as a critical pressure point. Historically one of the busiest travel periods of the year, Thanksgiving week saw over 20 million passengers take to the skies in 2024. This year, however, the travel industry is warning of “mass chaos” if the shutdown continues. Air traffic controllers and TSA officers—many of whom are working without pay—are reporting increased absenteeism, raising concerns about flight delays, cancellations, and longer security lines.
Industry leaders, including major airlines and hospitality groups, have urged Congress to pass a clean continuing resolution to reopen the government before the holiday rush. The U.S. Travel Association estimates that the shutdown has already cost the travel economy over $4 billion, and each additional week could result in another $1 billion in losses. Public confidence in air travel is waning, with surveys showing that 60% of Americans are reconsidering their travel plans.
With Thanksgiving approaching, the political stakes are rising. Lawmakers face mounting pressure from constituents and industry leaders to resolve the shutdown before it disrupts one of the most economically significant and emotionally meaningful travel periods of the year. The coming days may prove pivotal in determining whether Washington can find common ground—or whether the shutdown will continue to strain the nation’s economy and infrastructure. Here’s to hoping that lawmakers can find a reasonable compromise and reopen the government sooner rather than later.
Closing Comments
That’s a wrap for October. Thanks for letting us be part of your financial journey. As fall settles in, we hope you’re taking time to enjoy the season—whether that’s cozy nights in or crisp autumn adventures—knowing we’re here to keep your plan on track.
See you next month!
Disclosures
Investing involves the risk of loss. This content is for informational purposes only and should not be, nor regarded as personalized investment advice or relied upon for investment decisions. Laurence Schiffman and Traverse Planning are affiliates of Clear Creek Financial Management and may maintain positions in the securities discussed in this video. All opinions expressed here are solely those of Traverse Planning and do not reflect the opinions of Clear Creek Financial Management.
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