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Market Commentary and Trade Rationale
At BlueStem Wealth Partners it is important to us that you are well informed about how we are managing your portfolio. The written commentary below is for the time period ending October 31st, 2025.
Equity markets have navigated a challenging environment with notable stability, as the S&P 500 notched its 36th record close of the year on October 28, posting a year-to-date gain of over 17%. This strong performance comes despite the ongoing government shutdown, now entering its fourth week, which has created a data blackout and complicated both economic forecasting and policy decisions1,2. Nevertheless, investor enthusiasm has been fueled by strong third-quarter earnings, particularly from technology giants3, even as concerns about regional bank credit and lingering trade tensions have occasionally rattled markets4.
The Federal Reserve delivered its second interest rate cut of the year on October 29, lowering the federal funds rate by 25 basis points to a range of 3.75%-4.00%, the lowest level since 20225. Fed Chair Jerome Powell struck a cautious tone, pushing back on expectations for another rate cut in December, saying additional reductions are “far from” a foregone conclusion6. His remarks sent Treasury yields higher6. The Fed also announced it would end its quantitative tightening program in December, halting the reduction of its securities holdings7. Meanwhile, September inflation rose to an annual rate of 3.0%, up from 2.9% in August and slightly below expectations of 3.1%8. Collected just before the government shutdown, it was the only official economic data available during this period, providing the Fed with just enough input to support its rate decision9.
Earnings season has continued to highlight strength in technology and AI-driven sectors10,11. Nvidia made history by becoming the first company to surpass a $5 trillion market capitalization12, driven by massive AI chip orders and plans to build supercomputers for the U.S. government13. Broader tech earnings have exceeded expectations10,11, reinforcing investor optimism despite macroeconomic headwinds. On the trade front, Presidents Trump and Xi reached a deal at the APEC summit to reduce U.S. tariffs on Chinese goods, suspend rare earth export controls, and pause port fees for a year14. In return, China agreed to resume U.S. agricultural purchases and cooperate on fentanyl controls14. Markets responded positively, viewing the agreement as a temporary easing of tensions, though key structural issues remain unresolved15.
Recent Trade Rationale: If you would like to see a high-level recap of recent changes to the model portfolios, please click on the link to read the November 2025 Trade Rationale. As a reminder, we utilize quantitative techniques to manage the models. Level Elements are designed to manage your model’s equity and fixed income exposure over time. This changes as fundamental, quantitative, and economic data changes. Style Elements are designed to manage what is in those equity and fixed income exposures.
All opinions expressed in this commentary are for general informational purposes and constitute the judgment of the author(s) as of the date of the report. These opinions are subject to change without notice and are not intended to provide specific advice or recommendations for any individual or on any specific security. The material has been gathered from sources believed to be reliable; however, BlueStem Wealth Partners cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source. To determine which investments or planning strategies may be appropriate for you, consult your financial advisor or other industry professional prior to investing or implementing a planning strategy. This commentary is not intended to provide investment, tax or legal advice, and nothing contained in these materials should be taken as such. Investment Advisory services are offered through BlueStem Wealth Partners are only offered where BlueStem Wealth Partners and its representatives are properly licensed or exempt from licensure. No advice may be rendered unless a client agreement is in place. The material provided is for informational purposes only and is not meant to be a solicitation or recommendation to buy/sell any security. BlueStem Wealth Partners is an investment advisory firm registered with the Securities and Exchange Commission (“SEC”). SEC registration does not imply a certain level of skill and or expertise.