Weekly Market Commentary - October 18, 2025
Week In Review
The opaque nature of the private credit market became more evident to investors as the magnitude of
the First Brands Group bankruptcy filing was revealed in court records. The debt obligations were estimated to be as large as $50 billion, far greater than previously disclosed. 3 The headline illuminated the obscure risks in private markets and promoted an overall widening in credit spreads. Even so, the fear of contagion was eclipsed by positive earnings suprises from major financial institutions and was the fuel for a strong late-week recovery across all major U.S. equity indices. It was a turbulent week for sentiment, but the S&P 500 finished up +1.7%.
This Week
Despite the government shutdown, the Trump administration ordered the Bureau of Labor Statistics to
bring back key employees to calculate the September Consumer Price Index. This activity was deemed essential because the Social Security Administration requires the data to calculate and announce the cost-of-living adjustment for Social Security benefits. The updated CPI arrives just in time for the upcoming FOMC meeting. The third quarter earnings season continues with 90 S&P 500 companies providing results, including Netflix, Intel, Meta, General Motors, and 3M. 4
Portfolio Themes
The strong equity performance of semiconductor and enterprise software companies associated with
artificial intelligence has propelled S&P 500 valuation levels to dizzying heights. It’s good to remember that the S&P 500 is comprised of 11 different economic sectors. Industry breadth has recently improved, and a top-down U.S. sector rotation strategy may be a potential source of positive excess return (“alpha”) in model portfolios. Simplicity Wealth’s Multi-Manager Model Suite uses model substitutes, giving advisors the flexibility to customize the portfolio with a U.S. sector rotation strategy while maintaining the integrity of the original risk profile.
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Data: Unless otherwise noted, data for charts, graphs, and tables is sourced from YCharts.
1Style box returns use various Russell indices tied to specific areas of the market cap (vertical) and style (horizontal) spectrums. Indices are not typically available for direct investment, are unmanaged, and do not incur fees or expenses.
2 Index Statistics: P/E Ratio – Displays the forecasted P/E ratio of the representative index ETF. Yield - Dividend-per-share divided by current share price. Table statistics are updated weekly. MSCI indices represent broad global and international equity markets. Indices are represented by iShares ETF proxies (IVW, IVV, IVE, ACWI, and ACWX).
3 Private Debt Investor.
4FactSet. Past performance does not guarantee future results.
Weekly commentary and investment advisory services are provided by Simplicity Wealth, LLC a SEC Registered Investment Adviser. Registration does not imply a certain level of skill or training. The information provided is for informational purposes only and does not constitute any form of advice or recommendation. The information contained within has been obtained from various sources and is believed to be accurate at the time of publication.
