Stocks Take a Breather

For the week ending 7 November 2025

As of midday Friday, global equities were moderately lower on the week as valuation concerns over high-flying AI stocks prompted some profit-taking. The yield on the US 10-year note held steady at 4.10% while the price of a barrel of West Texas Intermediate crude oil eased to $59.75 from $60.50 a week ago. Volatility, as measured by futures contracts on the Cboe Volatility Index (VIX), rose to 21.2 from 18.5 last Friday.

MACRO NEWS

Supreme Court hears IEEPA tariff arguments

On Wednesday, the United States Supreme Court heard oral arguments in the case brought against President Donald Trump by a number of small businesses. The justices grilled Solicitor General John Sauer over the administration’s use of the International Emergency Economic Powers Act as the basis for many of President Trump’s tariffs. Several of the justices that have historically sided with the president on various matters sounded particularly skeptical of the government’s reasoning. Analysts note that the tone of oral arguments does not always line up with how cases are ultimately decided, and the court may be reluctant to create economic shockwaves if the tariffs are stuck down in total. On Thursday, President Trump announced he will impose no new tariffs while the case is pending before the high court. While overruling Trump’s use of IEEPA to levy tariffs would be disruptive in the near term, the administration has other authorities at its disposal to accomplish many of its trade goals so it is unlikely that tariffs are going away any time soon. 

Democrats sweep off-year US elections

Democratic candidates won a series of high-profile elections, including governor’s races in Virgina and New Jersey, and a ballot initiative in California that will allow for a midterm redistricting of the state’s congressional map, which is a move expected to net Democrats as many as 10 additional seats in the US House of Representatives. The party out of power in Washington typically does well in off-year and midterm elections as its members tend to be more motivated to turn out and vote than those who support the party in power.

QUICK HITS

Global PMIs ticked higher in October with the JP Morgan global composite reaching a 17-month high. US service sector activity surged in October though the prices paid index rose to a three-year high. 

ADP estimates US private employment rose 42,000 in October, better than the consensus forecast for a rise of 30,000. September figures were revised to -29,000 from -32,000.

The US and China have agreed to establish direct communication between their militaries to help avoid conflict, according to US Defense Secretary Pete Hegseth. The purpose of the communication channels will be to “deconflict and deescalate any problems that arise,” Hegseth said.

The Financial Times reported that the Trump administration is discussing ways to encourage other countries to adopt the dollar as their primary currency to counter an effort led by China to erode the greenback’s global dominance.

After meeting in Toronto last Friday, G7 energy ministers announced a Critical Minerals Production Alliance to combine and coordinate efforts for reducing the lead time to independence from China on critical minerals.

Speaking on a panel in Hong Kong, the CEOs of Goldman Sachs and Morgan Stanley raised the possibility of a 10% to 20% drawdown in US equity markets over the next 12 to 24 months, sparking a modest pullback on Tuesday. The CEOs said investors should welcome periodic pullbacks, saying they are healthy developments rather than signs of crisis.

In a nationally televised speech on Tuesday, Chancellor of the Exchequer Rachel Reeves declined to reiterate Labour’s commitment against broad-based tax hikes as she made an appeal to the British public to support her upcoming budget.

The US Federal Aviation Administration announced Wednesday that, if the government shutdown continues, ten percent of air traffic at 40 "high-traffic" airports will be cut starting Friday. The shutdown has extended into a sixth week, becoming the longest in history. A bill is expected to be offered on the Senate floor later Friday attempting to break the impasse.

In its quarterly refunding statement Wednesday, the US Treasury Department said it anticipates keeping auction sizes unchanged for nominal notes, bonds and floating-rate notes for at least the next several quarters.

After meeting with Swiss executives on Tuesday, President Trump announced the reopening of trade talks with Switzerland.

Canadian Prime Minister Mark Carney’s first budget, if enacted, is projected to increase the country’s deficit by C$42 billion.

The resumption of student loan repayments has seen the percentage of US consumer loan delinquencies rise to their highest levels in more than five years. Around 4.5% of debt was at least 30 days delinquent in the July-to-September period, and the share of student-loan debt becoming delinquent climbed to 14.4%, according to the Federal Reserve Bank of New York. However, relatively low mortgage delinquency rates reflect the housing market’s resilience, driven by ample home equity and tight underwriting standards, the NY Fed said.

The Bank of England’s Monetary Policy Committee held rates steady by a razor-thin 5-4 majority on Thursday with four members voting for a cut. The committee said it expects that inflation will have peaked at 3.8% in September and that rates are likely on a downward path. BOE Governor Andrew Bailey said after the meeting that AI could be the next productivity “dial-mover” or it could be a bubble.

Nikkei reports that the government of Japan’s Prime Minister Sanae Takaichi is preparing a supplementary budget that adds more than Y10 billion in spending, a portion of which will go to supporting the country’s AI industry.

According to Challenger, Gray and Christmas, large US companies announced 153,074 job cuts last month, almost triple the number during the same month last year, driven by the technology and warehousing sectors. It was the largest layoff for any October since 2003.

China purchased two cargoes of US -grown wheat this week, its first since October 2024.

President Trump on Thursday announced agreements with drugmakers Eli Lilly and Novo Nordisk to sell their GLP-1 medications to Medicare for $149 per month for the lowest dose and $245 per month for larger doses. The changes are expected to take effect in mid-2026.

The Canadian labor market expanded strongly again in October as nearly 67,000 new jobs were created in October following a gain of 60,000 in September. The unemployment rate fell to 6.9% from 7.1%, and wages rose at a 4% annual rate. The one chink in the armor was all the job gains were in part-time positions while 18,500 full-time jobs were lost. Markets expect the Bank of Canada to hold rates steady at 2.25% from here.

The National Retail Federation forecasts that US consumers will spend more that $1 trillion on holiday shopping this year, a first.

Federal Reserve Bank of New York President John Williams said Friday morning that the central bank may soon have to begin gradually expanding its balance sheet again. Any purchases would not represent a shift in monetary policy, Williams stressed.

President Trump said this week that trade talks with India are going well and that India has cut down on imports of Russian oil. Trump said he may visit India next year.

The University of Michigan consumer sentiment index fell to 50.3 in November, the lowest since June 2022.

EARNINGS NEWS

With about 91% of the constituents of the S&P 500 Index having reported for Q3 2025, blended earnings per share (which combines reported data with estimates for those that have yet to report) show that earnings rose 13% compared with the same quarter last year, according to data from FactSet. Blended sales rose 8.3% year over year.  

THE WEEK AHEAD

Monday: Japan leading indicators

Tuesday: UK unemployment; US NFIB optimism survey

Wednesday: Japan PPI

Thursday: UK GDP, industrial production

Friday: Eurozone trade balance

Stay focused and diversified
In any market environment, we strongly believe that investors should stay diversified across a variety of asset classes. By working closely with your investment professional, you can help ensure that your portfolio is properly diversified and that your financial plan supports your long-term goals, time horizon and tolerance for risk. Diversification does not guarantee a profit or protect against loss.

The information included above as well as individual companies and/or securities mentioned should not be construed as investment advice, a recommendation to buy or sell or an indication of trading intent on behalf of any MFS product.

Securities discussed may or may not be holdings in any of the MFS funds. For a complete list of holdings for any MFS portfolio, please see the most recent annual, semiannual or quarterly report. Full holdings are also available on the individual Fund Summary tab in the Products section of mfs.com.

The views expressed in this article are those of MFS and are subject to change at any time. No forecasts can be guaranteed.

Past performance is no guarantee of future results.

Sources: MFS research, Wall Street Journal, Financial Times, Reuters, Bloomberg News, FactSet Research.