A Penguin's Perspective

This is a cheese-loving, macroeconomic, pattern-trading penguin’s perspective of the markets and more.

Daily Market Analysis – 20251016

DMA of 2025 OCTOBER 16 THURSDAY AMC.

A brief and modest early rally around AI enthusiasm quickly faded into a broad market retreat just before midday, with the S&P 500 (-0.6%), Nasdaq Composite (-0.5%), and DJIA (-0.7%) trading progressively lower throughout the session. The small-cap Russell 2000 (-2.1%) and S&P Mid Cap 400 (-1.2%) lagged as the market displayed a risk-off disposition, resulting in some safe-haven demand in U.S. Treasuries.

For much of the morning, only the financials sector (-2.8%) traded in negative territory, with the initial weakness concentrated in insurer names after Marsh McLennan (MMC 186.48, -17.37, -8.52%) and Travelers (TRV 261.57, -7.88, -2.92%) traded lower despite beating earnings expectations. 

The sector would weigh heavier on the market after Zions Bancorp (ZION 46.93, -7.10, -13.14%) and Western Alliance Bancorp (WAL 70.32, -8.52, -10.81%) disclosed that they were victims of fraud involving loans tied to funds that invest in distressed commercial real estate, according to Bloomberg. Zions Bancorp disclosed a $50 million charge-off for one of the loans, which will be reflected on the company’s Q3 earnings statement.

The KBW Regional Bank ETF slid 6.3% in response.

The scandal adds to a growing list of recent missteps that have prompted credit quality concerns across the industry, including Jefferies‘ (JEF 48.80, -5.80, -10.62%) exposure to the recently bankrupt First Brands and JPMorgan Chase (JPM 298.54, -7.15, -2.34%) and Fifth Third’s (FITB 40.36, -2.56, -5.96%) exposure to the bankrupt Tricolor Auto.

Eroded confidence in the broader market ultimately saw ten S&P 500 sectors close with losses. 

Only the information technology sector (+0.1%) closed with a slight gain, led by strength in chipmakers after Taiwan Semiconductor Manufacturing (TSM 300.00, -4.71, -1.55%) reported strong AI demand in its Q3 earnings report. The PHLX Semiconductor Index (+0.5%) closed with a modest gain after retreating beneath its flatline. 

Despite the slight advance, the sector also held one of the worst-performing names in the S&P 500 amid a day ripe with laggards. F5 Networks (FFIV 295.35, -35.40, -10.70%) traded sharply lower after Bloomberg reported that the company’s flagship BIG-IP product was breached by state-backed Chinese hackers.

Other notable laggards today included United Airlines (UAL 98.19, -5.86, -5.63%), which traded lower despite an earnings beat. CEO Scott Kirby said the federal government shutdown could hurt bookings if it continues, according to CNBC.

Kenvue (KVUE 14.11, -2.15, -13.22%) crashed to all-time lows on reports that the company is facing new litigation in the United Kingdom related to talc-based products, which the suit alleges are related to ovarian cancer claims.

The energy sector (-1.1%) also lagged as crude oil futures settled today’s session $1.25 lower (-2.1%) at $57.03 per barrel. Reuters reported that the U.S and India had productive talks and Indian refiners are already lowering Russian imports by 50%. 

President Trump and Russian President Putin spoke on the phone today, with President Trump describing the conversation as “very productive” and announcing that he will meet with the Russian president in Hungary to discuss the war in Ukraine soon. 

There were relatively few developments regarding the recent trade tensions with China throughout the session, though President Trump described the situation as a trade war yesterday evening. 

Mounting geopolitical uncertainty, credit quality concerns across the banking industry, and a handful of negative corporate headlines culminated in a volatile environment for equities today that saw the CBOE Volatility Index surge over 20%. 

While stocks largely retreated throughout the session, U.S. Treasuries saw some safe-haven interest, with relative strength up front sending the 2-year yield to its lowest level since August 2022. The 2-year note yield settled down seven basis points to 3.43%, and the 10-year note yield settled down seven basis points to 3.98%. 

BENCHMARK INDICES YEAR-TO-DATE

  • Nasdaq Composite: +16.8% YTD
  • S&P 500: + 12.7% YTD
  • Russell 2000: +10.6% YTD
  • DJIA: +8.0% YTD
  • S&P Mid Cap 400: +3.1% YTD

MARKET INTERNALS

  • DOW closed lower at 45952 (-0.65%). 
  • Nasdaq closed lower at 22563 (-0.47%). 
  • S&P 500 closed lower at 6629 (-0.63%). 
  • Action came on higher than average volume (NYSE 1,239 mln vs avg. of 1,195 mln; NASDAQ 11,486 mln vs avg. of 9,410 mln),
  • Advancing/declining volume for NYSE (320 mln/907 mln) and Nasdaq (3373 mln/8079 mln). 
  • Decliners led advancers (NYSE 749/2018; NASDAQ 1391/3411)
  • New 52-week highs outpacing new lows (NYSE 122/59, NASDAQ 239/127).

After-Hours Action

US stock futures edged lower on Friday as concerns over bad loans at regional banks pressured sentiment. On Thursday, the Dow fell 0.65%, the S&P 500 dropped 0.63%, and the Nasdaq Composite lost 0.47%. Ten of the 11 S&P sectors finished lower, with financials leading the declines. The weakness followed disclosures from Zions Bancorporation and Western Alliance about troubled loans, heightening fears of broader credit market stress. Investors now await earnings from other regional lenders, including Comerica and Fifth Third. Meanwhile, markets remained unsettled by the prolonged US-China trade war and the ongoing US government shutdown. Wall Street has experienced sharp swings this week after last Friday’s selloff triggered by President Donald Trump’s renewed tariff threats on China, with the S&P 500 up as much as 2.6% before surrendering more than half those gains.

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: CSX +2.4%, CNS +2.2%, FNB +1.6%, SFNC +1%, GBCI +0.1%,

Companies trading higher in after hours in reaction to news: KZR +44.6% (regulatory update on Zetomipzomib program), IRON +19.1% (receipt of FDA Commissioner’s National Priority Voucher for Bitopertin), PRAX +5.7% (proposed public offering), NEXT +4.4% (final decision on Train 5), NMAX +4% (crypto plan for asset reserve), CTEV +3.6% (renews contracts), ATAI +2.2% (FDA breakthrough therapy designation granted to BPL-003; also proposed public offering of shares), GPRK +0.9% (completes acquisition from Pluspetrol), EQT +0.7% (increases dividend), EBC +0.3% (election deadline for merger and anticpated delisting of HarborOne (HONE), CVS +0.2% (to be core parter in TrumpRx fertility program), FIBK +0.1% (Security First bank to acquire branches from First Interstate Bank),

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: LBRT -4.5%, OZK -2.8%, IBKR -1.7%,

Companies trading lower in after hours in reaction to news: SLI -12.5% (proposed public offering of $120 mln of common shares), LLY -4.5% (President Trump says the cost of Ozempic will be reduced, according to Reuters), NVO -3.9% (President Trump says the cost of Ozempic will be reduced, according to Reuters), LXEO -3.6% (proposed offering of common stock and pre-funded warrants), TSHA -2.6% (regains full rights to lead TSHA-102 program), CWK -2.4% (shareholders approve re-domiciliation), CRWV -0.4% (reaffirms rationale behind CORZ acquisition; appoints new CRO), COMM -0.3% (shareholders approve sale of Connectivity and Cable Solutions business to APH), TXN -0.2% (names new Chair), IMAB -0.2% (strategic transformation to global biotech platform; to pursue Hong Kong IPO; rebrand as NovaBridge Biosciences), APH -0.1% (COMM shareholders approve sale of Connectivity and Cable Solutions business to APH) EFX -0.1% (launch of Equifax Ignite AI Advisor), CIO -0.1% (stockholders approve merger by MCME Carell Holdings), ROG -0.1% (current Chair to not stand for re-election; appoints new Chair)

BONDS AND YIELDS

U.S. Treasuries reached their best levels of the week on Thursday with relative strength up front sending the 2-yr yield to its lowest level since August 2022. The early portion of the session resembled yesterday’s start in shorter tenors, as the market backpedaled, briefly turning negative in mid-morning trade. However, the flat line offered support, followed by an intraday rally that took place alongside broad-based weakness in equities. Regional banks were among the worst performers, eliciting memories of the regional bank crisis from two years ago, after Zions Bancorp (ZION 46.83, -7.20, -13.33%) beat expectations, but also announced a charge related to legal action. Treasuries reached their best levels in the early afternoon, remaining just below their highs into the close. Today’s buying pressured yields on 10s and 30s to levels from April while the 5-yr yield stopped just shy of its September low. The 2-yr yield finished on a three-year low as the market’s expectations for a 25-basis point October rate cut solidified with a renewed, though still slight, rise in expectations for a 50-basis point cut (3.2%). Crude oil settled at its lowest level since May while the U.S. Dollar Index fell 0.5% to 98.35.

Yields

  • 2-yr: -7 bps to 3.43%
  • 3-yr: -8 bps to 3.43%
  • 5-yr: -8 bps to 3.55%
  • 10-yr: -7 bps to 3.98%
  • 30-yr: -6 bps to 4.58%

ROTW UPDATES

  • President Trump acknowledged that the U.S. and China are in a trade war.
  • President Trump said that he will meet with Russia’s President Putin in Budapest.
  • An agreement that South Korea will invest $350 bln in the U.S. as part of the trade is reportedly close to being reached.
  • French Prime Minister Lecornu survived two no-confidence motions by a slim margin.
  • European Central Bank policymaker Muller said that rates are in a good place.
  • Japan’s August Core Machinery Orders were down 0.9% m/m (expected 0.4%; last -4.6%) but up 1.6% yr/yr (expected 4.8%; last 4.9%). August Tertiary Industry Activity fell to -4.3 from 1.2.
  • Australia’s September employment increased by 14,900 (expected 20,500; last -11,800) and full employment increased by 8,700 (last -48,600). September Unemployment Rate rose to 4.5% from 4.3% (expected 4.3%) and Participation Rate rose to 67.0% from 66.9% (expected 66.8%).
  • New Zealand’s September FPI was down 0.4% m/m (last 0.3%).
  • Eurozone’s August trade surplus reached EUR1.0 bln (expected surplus of EUR6.9 bln; last surplus of EUR12.7 bln).
  • U.K.’s August GDP expanded 0.1% m/m, as expected (last -0.1%), growing 1.3% yr/yr, as expected (last 1.5%). August Construction Output was down 0.3% m/m (expected -0.1%; last 0.0%) but up 1.0% yr/yr (last 1.8%). August Industrial Production rose 0.4% m/m (expected 0.2%; last 0.4%) but was down 0.7% yr/yr (expected -0.6%; last -0.1%). August Manufacturing Production rose 0.7% m/m (expected 0.2%; last -1.1%) but was down 0.8% yr/yr (expected -1.0%; last -0.1%). August trade deficit reached GBP21.18 bln (expected deficit of GBP21.80 bln; last deficit of GBP20.65 bln).
  • Italy’s September CPI was down 0.2% m/m, as expected (last 0.1%) but up 1.6% yr/yr, as expected (last 1.6%). August trade surplus reached EUR2.05 bln (expected surplus of EUR8.94 bln; last surplus of EUR7.83 bln).

U.S. ECONOMIC UPDATES

  • The Philadelphia Fed survey fell to -12.8 in October (Briefing.com consensus 9.1) from 23.2 in September.
  • The NAHB Housing Market Index rose to 37 in October (Briefing.com consensus 33) from 32 in September.
  • The Treasury Budget for September showed a surplus of $198.0 billion compared to a surplus of $80.3 billion in the same period a year ago. That is the largest monthly surplus since April 2025. The September surplus resulted from receipts ($544.0 billion) exceeding outlays ($346.0 billion). The Treasury Budget data are not seasonally adjusted, so the September surplus cannot be compared to the August deficit of $344.8 bln.
    • The key takeaway from the report is that the FY25 deficit was less than the FY24 deficit. That is the good news. The bad news is that the FY25 deficit was still $1.775 trillion, even with the collection of $195 billion in customs duties (for tariffs).
  • President Trump says U.S. in a trade war with China, according to USA Today
  • The Supreme Court appears likely to weaken key section of Voting Rights Act. This will allow Republicans to eliminate roughly 12 Democratic House seats through redestricting. The Supreme Court will likely issue a final ruling in June but could rule more quickly, according to NY Times
  • President Trump said he might attend Supreme Court hearing on tariff authority. He said case will be “one of the most important cases in the history of our country.”, according to CNBC
  • South Korea optimistic about finalizing trade agreement with U.S., according to Reuters

US Crude Inventories Post Largest Weekly Gain Since July
US crude oil inventories rose by 3.524 million barrels in the week ending October 10, 2025, following a 2.78 million-barrel build the previous week. The increase far exceeded market expectations of a modest 0.12 million-barrel rise, marking the largest weekly gain since early July.

US 30-Year Mortgage Rate Eases for 2nd Week
The average rate on a 30-year fixed mortgage eased to 6.27% as of October 16th, 2025, down from 6.30% in the previous week and marking the second straight weekly decline, according to a survey of lenders by mortgage giant Freddie Mac. “Mortgage rates inched down this week and have held relatively steady over the past several weeks. Importantly, homeowners have noticed these consistently lower rates, driving an uptick in refinance activity. Combined with increased housing inventory and slower house price growth, these rates also are creating a more favorable environment for those looking to buy a home,” said Sam Khater, Freddie Mac’s chief economist.

Philadelphia Factory Activity Contracts Sharply in October
The Philadelphia Fed Manufacturing Index fell to a six-month low of -12.8 in October 2025, down sharply from 23.2 in September and well below market expectations of 10, which points to a sharp slowdown in manufacturing activity in the Philadelphia region. Shipments fell 20 points but remained positive at 6.0, while new orders rose 6 points to 18.2. Employment edged down 1 point to 4.6, indicating overall job gains, while the average workweek contracted to 12.8 from 14.9. Both price indexes moderated but remain elevated, with the prices paid index rising 3 points to 49.2 and the prices received index rising 8 points to 26.8 after declining last month. Despite the weak current indicators, the survey’s future activity indexes point to broad expectations for growth over the next six months.

US Natural Gas Storage Rises as Expected
US utilities injected 80 billion cubic feet (Bcf) of natural gas into storage for the week ending October 10, 2025, roughly in line with market expectations. The build compares with an increase of 77 Bcf in the same week last year and a five-year average rise of 83 Bcf for this period. The latest addition brought total US gas inventories to 3,721 Bcf, which is 0.7% higher than a year ago and 4.3% above the five-year seasonal norm.

US Homebuilder Sentiment Climbs to Six-Month Peak
The NAHB/Wells Fargo Housing Market Index in the US rose to 37 in October 2025, the highest in six months, compared to 32 in each of the previous two months, and above forecasts of 33 as decline in morgage rates and imporved sales expectations boosted the sentiment. Current sales conditions increased four points to 38. Sales expectations in the next six months jumped nine points to 54 and the traffic of prospective buyers gauge posted a four-point gain to 25. In a sign of ongoing challenges for the housing market, the survey also revealed that 38% of builders reported cutting prices in October. Meanwhile, the average price reduction rose to 6% in October after averaging 5% for several months previously. The last time builders reduced prices by 6% was a year ago in October 2024. The use of sales incentives was 65% in October, unchanged from September.

NY Services Activity Shrinks the Most in Over 4 Years
The Federal Reserve Bank of New York’s general business activity index, which tracks economic activity in New York State and parts of New Jersey and Connecticut, fell 4.2 points to -23.6 in October 2025. This marks the weakest reading since January 2021, when the service sector was still recovering from the pandemic. The business climate index dropped to -42.9, indicating conditions remain worse than normal. Employment edged down, and wage growth stayed modest. Supply availability continued to deteriorate, while input prices remained elevated even as selling price increases slowed. Overall, firms expressed slight pessimism about the near-term outlook.

EARNINGS SEASON AND GUIDANCE

  • ABB Ltd (ABBNY) reports Q3 results; names Christian Nilsson as CFO
  • Allstate (ALL) estimates catastrophe losses for the month of September of $161 mln or $128 mln, after-tax, from eight wind and hail events
  • Becton Dickinson (BDX) guides SepQ revenue in-line
  • BNY Mellon (BNY) beats by $0.11, beats on revs
  • BW LPG Ltd (BWLP) reports update on Q3 Product Services performance
  • Charles Schwab (SCHW) beats by $0.06, beats on revs, core net new assets up 41% yr/yr
  • Commerce Bancshares (CBSH) misses by $0.04, misses on revs
  • First Industrial Realty (FR) beats by $0.01, reports revs in-line; guides FY25 FFO in-line
  • Hewlett Packard Enterprise (HPE) issues FY26 guidance at Securities analyst meeting
  • Home Bancshares (HOMB) beats by $0.01, beats on revs
  • Hyperfine (HYPR) releases preliminary Q3 results; sees Q3 revs of approximately $3.4 mln, up 27% sequentially
  • Infosys (INFY) reports Q3 results
  • Insteel Industries (IIIN) misses by $0.05, misses on revs
  • J.B. Hunt Transport (JBHT) beats by $0.30, beats on revs
  • KeyCorp (KEY) beats by $0.03, reports revs in-line
  • M&T Bank (MTB) beats by $0.39; provides Q4 outlook
  • Manpower (MAN) beats by $0.02, reports revs in-line; guides Q4 EPS in-line
  • Marsh McLennan (MMC) beats by $0.07, reports revs in-line
  • Merck KGaA (MRK) reaffirms outlook at Capital Markets Day
  • Nestle (NSRGY) reports nine-month trading statement; plans headcount reduction; provides outlook
  • Pinnacle Finl (PNFP) beats by $0.23
  • Rexford Industrial Realty (REXR) beats by $0.01, beats on revs; guides FY25 FFO in-line
  • Salesforce (CRM) targets FY30 revs of $60 bln + at Investor Day
  • Silvercorp Metals (SVM) reports Q2 production and revs guidance
  • SL Green Realty (SLG) reports Q3 results
  • Snap-On (SNA) beats by $0.07, beats on revs
  • Synovus (SNV) beats by $0.10, beats on revs
  • Taiwan Semiconductor Manufacturing (TSM) beats by $0.29, beats on revs; guides Q4 revs above consensus
  • Triumph Financial (TFIN) reports Q3 (Sep) results; authorizes a $30 mln share repurchase program
  • United Airlines (UAL) beats by $0.13, reports revs in-line; guides Q4 EPS above consensus
  • U.S. Bancorp (USB) beats by $0.09, beats on revs; provides Q4 outlook
  • Western Alliance Bancorp (WAL) discloses information about credit relationships; total criticized assets are lower than they were on June 30, 2025; reaffirms FY25 guidance
  • Wipro (WIT) announces results for the quarter ended September 30, 2025 with outlook

2025 OCT 17

Pre-Market: ALLY AXP ALV CMA FITB HBAN RF SLB STT TFC WBS

After-Hours: None

THE WEEK AHEAD

WEEK 42: MONDAY TO FRIDAY, OCTOBER 13 to OCTOBER 17

According to the PTSD*, Week 42 has FIVE trading days and is the THIRD trading week in OCTOBER 2025. Seasonally, the PTSD has the week marked as slightly bullish. OCT 17 is Expiration Friday

We also have to keep in mind that with the current POTUS, the seasonals can go out of whack very easily.

*PTSD – Penguin Trader Seasonal Data.

BENCHMARK INDICES (21-YEAR AVERAGE)

The Stock Trader’s Almanac’s stats for the Benchmark Indices for 2025 OCTOBER XX of Week 42 over a 21-year average are:

  • Dow Jones (DJIA): Slightly Bearish 47.6%
  • S&P 500 (SPX): Slightly Bullish 57.1%
  • NASDAQ (COMP): Slightly Bullish 52.4%
  • *Russells 2000 (RUT): Slightly Bullish 56.3%

*The RUT is not listed in the STA; several penguins with a slide ruler calculated the 21-year average.

BENCHMARK INDEX ETFs

The Penguin Trader Seasonal Data (PTSD) stats for the Benchmark Index ETFs  for 2025 OCTOBER XX of Week 42 over a 15-year average are:

  • DIA – (15yr Avg):  Rather Bullish 63.6%
  • SPY – (15yr Avg): Rather Bullish 70.0%
  • QQQ – (15yr Avg): Rather Bullish 72.7%
  • RUT – (15yr Avg): Rather Bullish 63.6%

ECONOMIC DAY AHEAD

For USA’s upcoming economic calendar features:

  • 8:30 ET: September Housing Starts (Briefing.com consensus 1.320 mln; prior 1.307 mln), Building Permits (Briefing.com consensus 1.312 mln; prior 1.312 mln), and September Import/Export Prices
  • 9:15 ET: September Industrial Production (Briefing.com consensus 0.1%; prior 0.1%) and Capacity Utilization (Briefing.com consensus 77.3%; prior 77.4%)
  • 16:00 ET: August net Long-Term TIC flows (prior $49.2 bln)

ANALYSIS

A penguin will be volunteered for this post soon, or if incentivised with enough cheese.

COMMENTARY

The unexpected tumble midday was expected. We are in October, and it hasn’t been October since October started. Perhaps Now. We have Expiration Friday coming up.

On the Home front, my VS has registered red. I will look into it tonight.

Happy Hunting, my Penguin Friends.

Happy Hunting!

(Excerpts from briefing.com, tradingeconomics.com, financialscents.com, factset.com, marketwatch.com, etrade.com, forexfactory.com, yahoo.com, tigerbrokers.com, tradingview.com, tradingcentral.com, theedgemalaysia.com, finviz.com, sectorspdrs.com, Investopedia.com, and CNBC.com)