US equity markets finish week higher as tariff threat fades and banks rebound

Regional banks drive US market gains

After a choppy week, the three major United States (US) equity indices finished higher on Friday and for the week. Markets were buoyed as tariff threats faded and regional bank earnings eased credit market concerns. For the week, the Nasdaq 100 finished 2.46% higher, the S&P 500 added 1.70%, and the Dow Jones lifted by 711 points.

Regional banks rebounded on Friday after several, including Truist Financial, Regions Financial, and Fifth Third, reported better-than-expected earnings. Zions Bancorporation surged 5.8% to $49.67, Truist gained 3.67% to $42.60, Western Alliance added 3.1% to $72.48, and Fifth Third climbed 1.31% to $40.89.

Despite Friday’s rebound, questions remain about whether last week’s regional bank flare-up is contained or an early sign of broader systemic stress, particularly given the rapid growth in collateralised loan and private credit markets and signs of weaker lending discipline. Thursday’s flare-up followed JPMorgan’s Jamie Dimon warning earlier in the week about ‘cockroaches’ in the credit market after the collapses of Tricolour Holdings and First Brands Group.

Focus on US-China developments and upcoming tech earnings

Tariff-related tensions eased into the weekend after US President Trump acknowledged that a 100% tariff on China was unsustainable. It was confirmed he will still meet Chinese President Xi Jinping at the Asia-Pacific Economic Cooperation (APEC) Summit at the end of this month. News that Treasury Secretary Bessent will meet Chinese officials later this week in Malaysia also helped sentiment.

Looking ahead, attention this week will focus on US-China developments and third quarter (Q3) 2025 earnings from technology companies, including Tesla, Netflix, International Business Machines Corporation, and Intel.

Despite the US government shutdown entering its fourth week and the Federal Reserve (Fed) now in the blackout period, markets will receive a US inflation update (previewed below).

Consumer price index 

Date: Friday, 24 October at 10.30pm AEST

For August, headline inflation in the US increased by 0.4% in line with expectations. This resulted in the annual rate of headline inflation rising to 2.9%, below the forecast of 3%.

The annual core consumer price index (CPI), which excludes volatile items like food and energy, rose by 0.3% month-on-month (MoM), which saw the annual core inflation rate remain at 3.1%, unchanged from July and in line with market expectations.

For September, the expectation is for the annual headline inflation rate to rise to 3.1% year-on-year (YoY), which would be its highest reading since May 2024, while the core measure is expected to remain at 3.1% YoY.

Ahead of this, the US interest rate market is fully priced for a 25 basis point (bp) Fed cut in October and fully priced for another 25 bp cut in December, as the Fed prioritises bringing support to a cooling labour market despite persistent inflation.

US core inflation rate chart

Nasdaq 100 technical analysis

The rally from the September 22977 low to the recent 25,195 high is viewed as an extending Wave V, the last leg of a five-wave advance from the April 16,542 low. Within our preferred Elliott Wave framework, once a five-wave advance is complete, a correction is expected to commence.

An indication that a Wave V advance is complete, and that a correction has begun, would be if the Nasdaq 100 were to see a sustained break or close below support at 24,000 - 23,950. This would then open the way for a deeper pullback into support at 23,000 - 22,500.

It is important to be aware that while the Nasdaq 100 holds above support at 24,000 - 23,950, there is scope for a retest and break of the 25,195 high before a move towards 26,000.

Nasdaq 100 daily chart

S&P 500 technical analysis

The rally from the August 6343 low to the recent 6764 high is viewed as an extending Wave V, the last leg of a five-wave advance from the April 4835 low. Within our preferred Elliott Wave framework, once a five-wave advance is complete, a correction is expected to commence.

An indication that a Wave V advance is complete, and that a correction has begun, would be if the S&P 500 were to see a sustained break or close below support at 6550ish. This would then open the way for a deeper pullback into support between 6350 and 6200.

It is important to be aware that while the S&P 500 holds above short-term support at 6550, there is scope for a retest and break of the 6764 high before a move towards 6900.

S&P 500 daily chart

• _{Source: TradingView. The figures stated are as of 20 October 2025. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.}