US equities fell for a second consecutive week, according to VT Markets' weekly outlook. The S&P 500 lost 0.5% and the Nasdaq Composite declined 0.7%, while semiconductor shares dropped 3.2%, a move the outlook links to pressure on a sector closely tied to technology spending. Treasury yields also eased, but lower borrowing costs did not lift the broader market.
The pressure is not confined to equities. VT Markets reports that gold steadied after its biggest weekly drop since June, with traders weighing stubbornly high energy prices ahead of the Federal Reserve's policy meeting. The same outlook notes that global bond markets are signaling their most pronounced risk-off sentiment in more than a year, as a selloff in AI-related stocks and rising geopolitical tensions pushed investors toward safe-haven assets.
Higher energy costs are also described as a threat to business margins and household spending, which makes the energy outlook a central variable for the coming days. On the growth side, the outlook describes a mature US expansion with rising risks rather than an outright recession. GDP grew at an annualised rate of 2.2% in the second quarter, and unemployment stood at 4.2% in September.
Output continues to expand, although weaker hiring suggests growth is losing momentum. VT Markets stresses that stock markets often turn before the economy does, so the current stage of the cycle requires a combined reading of output, employment, spending and inflation. Inflation remains the main constraint on the Federal Reserve.
Consumer prices rose 0.6% month on month and 3.7% year on year in September, while producer prices increased 1.3% during the month. Markets expect the Fed to keep its target range at 3.75%-4.00% this week, but persistent inflation could keep further tightening on the table. The decision comes before the 29 October GDP and PCE releases, giving markets room to reassess the policy path soon after the meeting.
For the commodity complex and the dollar, the implications are direct. According to VT Markets, hotter inflation could support the US dollar and weigh on gold through higher expected interest rates, while softer inflation could ease that pressure provided growth holds up. Oil and other energy prices remain a key input, since the outlook identifies stubbornly high energy costs as a factor weighing on both gold traders and corporate margins.
A weaker dollar, by contrast, would tend to support gold, according to the outlook's analysis. Corporate profits remain the main source of support for equities. Citing a FactSet report dated 16 October, VT Markets says S&P 500 earnings were projected to grow 29% year on year in the third quarter, with full-year 2026 growth forecast at 32.8%.
The index's forward price-to-earnings ratio stood at 19 times, slightly below its 10-year average of 19.1 times. The outlook also notes that 84% of reporting companies exceeded estimates, but aggregate earnings came in just 2.6% above expectations, compared with a five-year average surprise of 7.5%. With the 10-year Treasury yield around 5%, investors can also compare equity returns with fixed-income alternatives.
VT Markets outlines three scenarios that could guide market direction. In a continued expansion, easing inflation, stable Treasury yields and resilient profits could support further equity gains. In a stagflationary slowdown, weaker demand alongside persistent inflation would limit the Fed's room to ease, squeezing margins and leaving equities exposed to sharper swings.
In a recession, a broader decline in employment, consumption and profits would strengthen the case for contraction, with shares potentially pricing in the deterioration before official data confirm it. The calendar also includes decisions beyond the United States. Australian CPI is due on 28 October, alongside the RBNZ and Bank of Canada decisions.
The FOMC statement, the core PCE price index and an ECB decision and press conference are scheduled for 29 October, and the Bank of Japan policy decision and press conference follow on 30 October. For currency and commodity traders, the outlook highlights that guidance on further BoJ increases could drive yen volatility. In its bottom line, VT Markets concludes that as of 24 October the US economy appears to be approaching the later stages of expansion, but there is not enough evidence to conclude a recession.
Strong corporate earnings continue to support equities, yet persistent inflation, elevated Treasury yields and tighter monetary policy make further gains increasingly dependent on actual profit growth rather than investor optimism. The outlook's own summary is that the US may be late in its economic cycle without necessarily being at the end of its stock market cycle. All figures in this article are as reported by VT Markets and FactSet and have not been independently verified here.
Source: vtmarkets.com