October 2025 Ivestylitics
Horizon Advisor Network Investment Committee October 13th, 2025
Executive Summary
The US government shutdown is entering its third week with no immediate signs of negotiation or settlement. This is delaying economic reports that the Federal Reserve Bank relies heavily on to make monetary policy decisions.
Historically, government shutdowns have happened on a relatively regular basis over the last 50 years and have not had a significant negative impact on either the economy or markets over time.
Corporate earnings will take center stage over the next couple of weeks. The earnings growth rate is expected to slow to approximately 8%, down from the double-digit rates we have experienced over the last three quarters. Earnings growth is expected to pick up in 2026, and investment analysts will closely watch earnings announcements for forward guidance on future results and expectations.
While the committee continues to be cautiously optimistic abo
ut the future returns of diversified portfolios, we should not forget how quickly markets can turn on negative news, as we saw on October 10th when issues reemerged between the United States and China.
The committee strongly believes that maintaining a disciplined diversification within your portfolio makes good sense. Rebalancing your portfolio regularly to take advantage of market fluctuations and raise cash for short-term needs remains wise.
The Horizon Advisor Network Investylitics Committee members met on the afternoon of Monday, October 13th. We were happy to have the opportunity to review the research from the various market strategists and economists that the committee follows. Since our meeting last month, the markets have continued their upward trend, with very littl
e in the way of pullbacks, until last Friday's very public spat between China and the United States over tariffs and rare-earth minerals. This caused the first significant downturn we had seen in the previous few months, though much of the initial decline was reversed earlier this week amid toned-down rhetoric and upbeat corporate earnings.
The US government shutdown is entering its third week, with no immediate signs of negotiations or a settlement. This is delaying economic reports that the Federal Reserve Bank relies heavily on to make monetary policy decisions. As government shutdowns have become much more commonplace over the last several decades, markets have shrugged off political rhetoric and focused more on positive news about mergers and acquisitions, deregulation, and the potential for strong earnings in the coming weeks.
As you can see in our first chart below, government shutdowns have occurred relatively regularly over the last 50 years and have not had a significant negative impact on the economy or markets. As you will notice, returns have been relatively muted during government shutdowns and have generally been positive following their resolution.
Source: Morningstar as of 9/30/2025, The US House of Representatives
As a matter of fact, the committee recommends that instead of focusing on daily political headlines and financial noise, you zoom out to look at the bigger picture. In the following chart, you can see the long-term trajectory of the markets over the last 45 years, with the various government shutdowns shown by the dotted lines. This illustrates that over long periods of time, corporate earnings and economic growth drive market returns far more than brief periods of government infighting and dislocations.
Corporate earnings will take center stage over the next couple of weeks. According to analysts, earnings growth is expected to slow to approximately 8%, down from the double-digit rates we have seen over the last three quarters. As shown below, earnings growth is expected to pick up in 2026, and investment analysts will closely watch earnings announcements for forward guidance on future results and expectations.
While the committee remains cautiously optimistic about the future returns of diversified portfolios, we should not forget how quickly markets can turn on negative news, as we saw on Friday when issues reemerged between the United States and China. We strongly believe that maintaining a disciplined diversification within your portfolio makes good sense, and that rebalancing your portfolio regularly to take advantage of market fluctuations and raise cash for short-term needs is the prudent course of action.
As always, if you have any questions regarding your unique situation, please do not hesitate to reach out to your advisor. We are here for you as we continue to navigate the economic and investment landscape. Thank you for your continued trust and support.