Earnings Momentum Tests Market Optimism as Policy Risks Linger

Nuveen’s CIO Weekly Commentary (13 Oct 2025), led by Saira Malik, weighs strong U.S. equity performance against macro and policy uncertainties.

• The S&P 500 is up +14.8% YTD, powered by AI-linked mega caps, but new tariffs, a U.S. government shutdown, and sticky services inflation threaten sentiment ahead of Q3 earnings.

• Consensus sees 8.1% EPS growth, but leadership is narrow—IT (+20.8%) and utilities (+16.0%) outperform, while energy and consumer staples contract, making selectivity essential.

• Despite data disruptions from the shutdown, Nuveen still expects up to three Fed rate cuts over 12 months; deregulation may support M&A while AI capex raises questions on productivity gains.

Can fundamentals justify stretched valuations into year-end? The full commentary explores portfolio positioning across sectors and asset classes.