Market Defies Tariff Fears as Cooling Inflation Fuels Rally

The U.S. stock market's major indexes reversed recent losses on October 24, 2025, as cooling inflation, robust corporate earnings, and optimism over Trump-era trade policies fueled a broad-based rally. The S&P 500, which had fallen 0.35% earlier in the week, closed up 0.79% for the day, while the Dow Jones Industrial Average surged 500 points to a record high, and the Nasdaq Composite climbed 1.03% as cooling inflation and strong earnings boosted Wall Street confidence. The gains followed a lighter-than-expected September inflation report and a string of strong earnings from tech and semiconductor giants, bolstering investor confidence ahead of the Federal Reserve's policy meeting, according to the Economic Times report.

Treasury Secretary Scott Bessent highlighted the market's resilience as evidence that President Donald Trump's aggressive tariff policies have not derailed economic growth. "Where the hell is the market risk? They've just been wrong," Bessent said, citing the S&P 500's 20% surge since April's "Liberation Day" tariff announcements, as reported when Bessent slams Trump tariffs critics. Meanwhile, Treasury Secretary Janet Yellen reinforced optimism, noting inflation is "continuing to decline toward the Fed's 2% target," a trend that has eased pressure on central banks to maintain tight monetary policy, with Yellen saying inflation is continuing to decline. The September Consumer Price Index (CPI) rose 3.0% year-over-year, below forecasts, with core inflation remaining stable, further stoking expectations of Fed rate cuts as early as March 2026, the Economic Times noted.

Corporate results amplified the rally, particularly in the technology sector. Microsoft, Meta, and Alphabet all reported earnings exceeding expectations, with analysts projecting continued outperformance relative to industry peers. Semiconductor stocks like AMD (+6.5%) and Micron (+3.1%) led the charge, reflecting strong demand for AI infrastructure and cloud computing, and the Russell 2000 index, tracking smaller companies, also gained 0.9%, signaling broad-based confidence.

Despite the market's strength, some institutional investors are reevaluating their exposure to yield-focused strategies. B&D White Capital, a Texas-based wealth advisory firm, exited its entire position in the Goldman Sachs S&P 500 Premium Income ETF (GPIX), selling $8.6 million worth of shares in the third quarter, as detailed when Wealth firm exits ETF. The move, part of a broader shift away from covered-call ETFs toward core equity holdings, underscores concerns that premium income strategies may lag in bull markets.

Conversely, Berkshire Hathaway's underperformance against the S&P 500—now at a 6.9 percentage-point gap—has drawn scrutiny. The conglomerate's 69% reduction in its Apple stake, initiated amid Buffett's anticipation of higher capital gains taxes, has cost it $167 billion in potential value compared to the current $74 billion valuation of its remaining position, as reported in coverage noting that Berkshire Hathaway lags S&P 500.

European markets remained cautiously optimistic ahead of the Trump-Xi meeting, with pan-European indexes flat despite a 3.5% annual rise in Danish retail sales and improved sentiment in Germany's Ifo business climate survey, according to a report that noted European indexes flat. German Chancellor Friedrich Merz separately called for a pan-European stock exchange to strengthen European capital markets against U.S. and Asian rivals, urging the creation of a pan-European stock exchange.

As the Fed's policy trajectory remains central to market dynamics, investors are balancing short-term optimism with longer-term risks, including potential government shutdowns and global trade uncertainties, according to the Economic Times coverage.