Amazon’s Surge Could Be Stock Market’s Final Big Boost for 2025

A modest advance over the next two months could deliver a third consecutive year of 20%-plus gains for the S&P 500. (NYSE)

Key Points

• Amazon’s third-quarter earnings are expected to boost markets, with shares opening at a record high and adding about $270 billion in market value.
• The S&P 500 is up around 16% for the year and 37% from its early April lows. It could reach 7000 by year end .
• Investors anticipate a potential quarter-point rate cut by the Federal Reserve in December, despite Chairman Powell’s hawkish tone.

Amazon.com looks set to give markets one of its final big boosts of the year on Friday, with a blowout set of third-quarter earnings likely to deliver the stock’s biggest single-day gain in a decade.

Shares in the tech and online retail behemoth opened at a record high on Friday, adding around $270 billion in market value. Apple also is on pace for a record close as investors welcome Thursday’s solid earnings update and robust forecast for holiday sales of the iPhone.

But around two-thirds of the S&P 500 have already issued their third-quarter earnings updates. Among the so-called Magnificent Seven, only Nvidia is left to report.

Its fiscal third-quarter earnings, slated for Nov. 19. will undoubtedly dominate investor attention. The same is true of the Federal Reserve’s final rate decision of the year on Dec. 10, but outside of those two benchmarks, there appears little in the way of headline events that will stoke market gains over the final two months of the year.

Not that it is needed. The S&P 500 is now up around 16% for the year, and some 37% from its early April lows. It could notch another record close by the end of the Friday session.

Still, more is always welcome. A modest push over the next two months, typically the strongest of the year for U.S. stocks, would likely lift the benchmark past the 7000-point threshold for the first time. It could deliver a third consecutive year of 20%-plus gains for the first time since the 1990s.

Yet investors shouldn’t count on it. Nvidia’s late November update will certainly help, but the chip company’s market capitalization has already climbed past the $5 trillion mark this month as management has detailed a flurry of deals that underpin its central position in the AI boom. That tide of good news means a quarterly earnings bombshell is less likely.

The Fed’s December policy meeting could also disappoint. Investors have been confident that the bank will cut rates again this year, but investors may not have fully appreciated Chairman Jerome Powell’s hawkish tone on rates earlier this week. Megacap tech earnings and the outcome of the U.S.-China trade talks in South Korea seem to have distracted the market.

The CME Group’s FedWatch Tool still points to 60% odds of a quarter-point reduction at the December meeting, a sign that Powell’s insistence that such a move is “far from…a foregone conclusion” has yet to fully register.

Bond markets, however, have taken heed. Benchmark two-year Treasury note yields have risen 0.12 percentage point over the past three days, while 10-year notes have added around the same.

Away from financial markets, talks to end the federal government shutdown, now entering its 31st day and nearing the longest on record, don’t appear to be making much progress. And even an agreement to resume operations in the coming weeks isn’t likely to have a major impact on U.S. stocks, which have gained more than 2% since the shutdown began on Oct. 1.

The Supreme Court will begin hearing oral arguments in the landmark case that challenges President Donald Trump’s authority to impose sweeping tariffs under the International Emergency Powers Act on Nov. 5, but a final ruling may not emerge before the end of the year.

That likely leaves stock markets riding the tailwinds of the One Big Beautiful Bill Act, a trade detente with China, and a resilient domestic economy.

Volatility gauges, meanwhile, remain muted.

The Cboe Group’s VIX index is pinned near the lowest levels in six months, while the Merrill Lynch Option Volatility Estimate, better known as the MOVE index and a benchmark of Treasury market volatility, is within a few points of the lowest levels in four years.

Stock investors have navigated a host of challenges over the past 10 months. A relatively quiet glide into the end of December would be a welcome change.

Write to Martin Baccardax at martin.baccardax@barrons.com