Dear trader, dear stock market friends,
With a gain of around 2.2 % and a breakout above the 47,000-point mark, the Dow Jones once again showed remarkable strength in the past trading week, ending the brief correction of the first half of October. The main tailwind came from falling consumer prices, the prospect of falling interest rates and signals of a de-escalation in the US-Chinese trade conflict (resumed talks, more moderate tone on tariffs). In addition, predominantly solid corporate figures from the recently started reporting season provided positive impetus.
Consumer price index cools down
On Friday, October 24, 2025, the Consumer Price Index (CPI) data for the month of September was released (delayed due to the ongoing US government shutdown). Consumer prices showed a year-on-year increase of 3.0 %, slightly below expectations of 3.1 %. The core rate, which excludes volatile components such as food and energy, was also slightly below expectations at 3.0 %. Declining inflation data reduces the pressure on monetary policy and provides the basis for further easing, which also benefited the Dow Jones on Friday.
Interest rate cut on Wednesday is a foregone conclusion
Looking ahead to this week's Fed meeting on Wednesday (29 October), a rate cut of 25 basis points is largely priced in due to moderate inflation and the weaker labour market. In addition to the key interest rate, the Fed's balance sheet is also in focus: a slowdown or halt in balance sheet reduction (QT) would further ease financing conditions. Both together would be an additional tailwind for equities, especially for interest rate-sensitive segments such as real estate, parts of the consumer sector and quality growth.
Reporting season picks up speed this week
The reporting season has so far delivered mostly solid results. Of the companies represented in the Dow Jones, Coca Cola was in the spotlight last week: the company's turnover climbed to $ 12.5 billion and earnings per share increased by % 30 on a YOY basis to $ 0.86. At the same time, the operating margin shot up from % 21 to % 32. For 2025, Coca Cola continues to target organic revenue growth of 5-6 % and currency-adjusted EPS growth of around 8 %. In terms of free cash flow, management is raising the bar and is forecasting at least $ 9.8 billion. The figures were extremely well received on the stock market and Coca Cola shares rose by around % on Tuesday, before a correction followed later in the week.
3M also published strong quarterly results last week, from which the stock benefited significantly and led the winners' list in the Dow with a weekly gain of more than 10 %. The company's sales amounted to $ 6.5bn (+3.5 % YoY), earnings per share rose to $ 2.19 (+10 % YoY), while the operating margin increased to % 24.7 (+170 bp). For the full year, 3M raised its EPS guidance to $ 7.95-8.05 and held out the prospect of further margin improvements.
Numerous other quarterly figures are due this week, with the focus on Microsoft on Wednesday and Apple and Amazon on Thursday, among others.
US government shutdown continues
Another topic that should not be completely lost sight of is the ongoing and unresolved budget dispute between Republicans and Democrats. The US federal budget could not be passed in time for October 1, 2025, which is why the US government is in a shutdown.
Although this situation is leading to massive delays in important economic statistics (e.g. labor market data, inflation data) and delays in government orders, the immediate effects on the Dow have so far been limited. However, the longer the lockdown lasts, the greater the risk that this could dampen sentiment and have an impact on the real economy. For the time being, however, the shutdown appears to be causing little uncertainty.
Technical outlook for the Dow Jones
As the Dow Jones is at an all-time high, the chart can be analyzed relatively quickly. The upward trend is intact, and corrections such as those we saw in the first half of October are generally opportunities for buying or long trades.
The S&P 500 and the Nasdaq 100 also rose to new highs on Friday, confirming the upward trend of the broad market. The Dow Jones Transportation Index, on the other hand, continues to show relative weakness, which is basically a warning signal; however, all other signals from chart technology and intermarket analysis currently point to a continuation of the bull market in the medium to long term. If the transportation index manages to break above the 16,000-point mark, this would be another important trend-confirming signal. A breakout below the support area at around 15,000 points, on the other hand, would lead to a downward trend in the transportation index and would be a signal that should not be ignored.
Author: Tobias Schmid
Date: 27.10.2025
