Global Growth Worries After Fed Cut

published at 10.30.2025

Global equity markets delivered a mixed performance midweek as investors assessed the Federal Reserve’s latest rate cut alongside a flood of corporate earnings. The Fed’s decision to lower its benchmark rate for a second consecutive meeting initially lifted sentiment, but cautious guidance from Chair Jerome Powell tempered optimism. While the Nasdaq gained modestly on strength in major tech names, the Dow Jones slipped, erasing part of its previous session’s advance, and the S&P 500 ended largely unchanged.

 

The Federal Reserve’s 25-basis-point cut brought its benchmark rate to a range of 3.75%–4.00%, reflecting concerns over slowing growth and softening labor conditions. The decision, supported by a 10–2 vote, highlighted divisions within the FOMC: Governor Stephen Miran argued for a deeper cut, while Kansas City Fed President Jeffrey Schmid preferred to hold rates steady. Powell’s remarks signaled uncertainty about another move in December, disappointing traders who had priced in a more dovish tone. The central bank also announced it would end its quantitative tightening program on December 1, adding a liquidity boost to financial markets.

Attention then shifted to the “Magnificent Seven” tech giants, which continued to steer broader market sentiment. Alphabet rallied after surpassing $100 billion in quarterly revenue for the first time, while Microsoft beat estimates thanks to strong cloud performance. However, Meta Platforms slid after warning of higher expenses in 2026. Elsewhere, Boeing reported revenue growth following earlier production constraints, and Caterpillar’s earnings revealed pressure from rising costs despite healthy top-line figures.

On the macroeconomic front, easing mortgage rates triggered a rebound in U.S. housing activity. Mortgage applications surged 7.1% in mid-October after four weeks of declines, as refinancing demand jumped 9% and purchase applications rose 5%. The average 30-year rate fell to 6.3%, its lowest in a year. However, pending home sales were flat in September, suggesting that uncertainty over employment and income prospects continues to weigh on buyer confidence. Analysts noted that a sustained recovery in housing will depend on whether the Fed maintains its easing trajectory.

 

Beyond the U.S., global sentiment was influenced by improving U.S.–China trade relations and further monetary easing abroad. The Bank of Canada trimmed rates by 25 bps to 2.25%, hinting that policy would likely remain on hold for the rest of the year. European equities mirrored Wall Street’s caution, with the Stoxx 600 slipping slightly as investors absorbed a dense earnings calendar. London’s FTSE 100 outperformed, setting a new record high, supported by gains in retail and pharmaceutical sectors, notably Next and GSK.


 

Earnings momentum continued to drive stock-specific action across Europe. GSK posted a strong quarter and upgraded its full-year outlook, while Next impressed with resilient consumer demand. Mining giant Glencore rose nearly 6% on improved copper production guidance, and Deutsche Bank advanced after a solid earnings beat. Mercedes-Benz shares gained despite weaker profits, as cost-control measures reassured investors. In contrast, WH Smith slipped after delaying its full-year results due to an internal financial review.

 

Markets appear caught between optimism about policy easing and lingering macroeconomic uncertainty. The Fed’s cautious stance, combined with mixed earnings, suggests that volatility may persist in the near term. For investors, this environment favors selective positioning — maintaining exposure to high-quality growth stocks with strong balance sheets, while gradually rotating into defensive sectors such as healthcare and consumer staples. Gold and other safe-haven assets may also benefit if economic data continue to signal slower momentum heading into 2026.

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