Weekly Update 11/14/2025: US Third Quarter Corporate Earnings Come in Strong as Government Shutdown Ends

• ADP raises dividend 10.4% - their 51st consecutive year of dividend increases
• Pfizer makes an acquisition to tap into the obesity drug market
• Disney announces earnings beating profit expectations but coming in shy on revenues; announces a 50% dividend increase 

Domestic Economic News  

With more than 90% of S&P 500 constituents having reported 3Q results, earnings growth now stands at 14.6% year over year, nearly double preseason expectations of 7.4%. It is not just the Magnificent Seven as strength has been broad-based, with the S&P 493 tracking 10.8% growth versus 5.3% expected. Consumer discretionary, health care and real estate all swung from projected declines to gains, while energy and staples showed only modest contractions. EPS breadth also surprised positively, with 81.9% of reporters beating estimates, above the three-year average of 78.4%. Earnings strength this season extended beyond the bottom line. Top-line results have been equally robust, with every S&P 500 sector surpassing preseason sales forecasts. Even the often-unloved energy sector, expected to contract 4.4% preseason, is now tracking a 1% gain. Aggregate S&P 500 revenue growth is pacing at 8.3%, roughly 235 bps above forecasts. Financials, energy and materials posted their highest sales beat rates in about four years, underscoring the broad-based nature of this quarter's upside surprise. Two-thirds of companies have beaten sales estimates, compared to the post-pandemic average of 61.1%.

President Donald Trump signed legislation to end the longest government shutdown in US history, marking the official conclusion to a 43-day impasse that halted food aid to millions of households, canceled thousands of flights and forced federal workers to go unpaid for more than a month. Trump’s signature meant the government could begin to resume normal operations, with federal workers expected back on the job starting Thursday. However it could still take days, or even weeks, for the federal bureaucracy to fully restart and dig out of the backlog after being closed since Oct. 1. Transportation Secretary Sean Duffy told reporters earlier Wednesday he anticipated it could take as long as a week to start lifting flight restrictions at major airports. The shutdown fight has weighed on the US economy. The Congressional Budget Office last month projected a six-week government closure would lower real gross domestic product growth in the current quarter by 1.5 percentage points. A bit more than half of the loss may be recouped early next year as federal programs resume and government employees receive back pay, the CBO forecast. In the end, that pain was enough to force a reopening. The House voted 222 to 209 early Wednesday evening to pass interim funding through Jan. 30. Democrats largely opposed the bill because it doesn’t include their central demand in the shutdown fight: the renewal of subsidies for Affordable Care Act health insurance policies set to expire at the end of the year.

Interest Rate Insight and the Fed

Federal Reserve Bank of New York President John Williams repeated his view that bank reserves in the US are close to reaching the level desired by the central bank, and gradual purchases of assets by the Fed would be a “natural next stage.” “Based on recent sustained repo market pressures and other growing signs of reserves moving from abundant to ample, I expect that it will not be long before we reach ample reserves,” Williams said Wednesday in remarks prepared for a conference hosted by the New York Fed. After reaching that level, it would be time for the Fed “to begin the process of gradual purchases of assets” to hold bank reserves at a sustained level, he added. The overnight reverse repo facility proved “very effective and flexible,” he continued. The Standing Repo Facility is expected to continue to be “actively used,” according to his statement. The Fed announced last month it would stop shrinking its balance sheet on Dec. 1.

In additional Fed news this week, Dr. Raphael W. Bostic, the president and chief executive officer of the Federal Reserve Bank of Atlanta, has announced his intention to retire at the end of his current term, which officially concludes on February 28, 2026. He served with distinction since June 5, 2017, and was the first African American president of a regional Federal Reserve Bank in its 111-year history. Bostic's retirement marks the beginning of a search for his successor, which will begin immediately.

Impactful International News

Switzerland is close to securing a 15% tariff on its exports to the US, in what would be a relief for the country after it was hit with a punishing 39% levy in August, according to people familiar with the matter. A deal may be concluded within the next two weeks. US President Donald Trump later confirmed his administration was “working on a deal to get their tariffs a little bit lower.” “I haven’t said any number,” he added when asked about a 15% rate. “But we’re going to be working on something to help Switzerland along. We hit Switzerland very hard. We want Switzerland to remain successful.” The Swiss Market Index rose 1% after the announcement Tuesday, led by stocks including luxury goods giant Richemont, contract manufacturer Lonza Group AG and private equity firm Partners Group Holding AG. The Swiss franc strengthened against the dollar and the euro as well. The previous negotiations ended with Switzerland being hit with the highest tariff rate the US imposed on any developed nation. Since then, the country has been trying to secure better terms, an effort that gained momentum last week when a group of Swiss billionaires and corporate executives met Trump at the Oval Office. Richemont Chief Executive Officer Johann Rupert and Partners Group billionaire founder Alfred Gantner were among the business leaders who met with Trump. The meeting went so well that Trump subsequently ordered Trade Representative Jamieson Greer to step up direct negotiations, which he did with Swiss counterparts on Friday. A deal would mark the successful culmination of weeks of shuttle diplomacy to Washington by Switzerland’s top trade diplomat, Helene Budliger Artieda, combined with the Swiss corporate charm offensive. A 15% rate would match the tariff on the neighboring European Union and be a vast improvement on the 39% bombshell that Trump announced on Aug. 1, Switzerland’s national holiday. The initial punitive tariff has been linked to Trump’s view of a perceived trade imbalance between the two countries, specifically a near $40 billion US goods deficit. Switzerland had tried to counter that this was offset by imports of services. What made the Aug. 1 announcement worse was that senior Swiss officials believed they had successfully negotiated a better deal with their US counterparts, which only needed sign-off from Trump. Switzerland can’t afford to lose too much time in its bid to get the levy reduced, as there are emerging signs of the damage caused by tariffs. The economy likely shrank in the third quarter, and the country’s central bank says the outlook “has deteriorated due to significantly higher US tariffs.” Unemployment is also rising, albeit from a low level, and is at the highest in four years.  

Investor confidence in Germany’s economy unexpectedly slipped, dampening optimism that the country’s fortunes are finally starting to improve. An expectations index by the ZEW institute dropped to 38.5 in November from 39.3 in the previous month. Analysts had expected a gain to 41. A measure of current conditions improved. “The overall mood is characterized by a fall in confidence in the capacity of Germany’s economic policy to tackle the pressing issues,” ZEW President Achim Wambach said in a statement on Tuesday. “Although the investment program is likely to provide economic stimulus, the structural problems continue to exist.” After two years of contraction and volatile output in 2025, there have been some signs that government plans to spend hundreds of billions of euros on defense and infrastructure are translating into stronger growth. Analysts expect output to rise in the fourth quarter following stagnation in the third. Other soft indicators had recently offered assurances that such expectations will come to pass. Business confidence jumped to the highest level since 2022 in the Ifo institute’s monthly survey, while a separate poll by S&P Global showed business activity surged in October — driven by the services sector. Hard data have been less convincing. Industrial production rose less than expected in September, only partially making up for a slide the previous month. Factory orders rose for the first time in five months, but the Economy Ministry warned that the situation remains “fragile.” Germany’s export-reliant industrial sector is particularly at risk from steeper US tariffs and greater competition from China. Chancellor Friedrich Merz’s coalition still sees growth of 1.3% and 1.4% in 2026 and 2027 — thanks largely to the higher public spending. The additional expenditure is likely to benefit the wider region, with European Central Bank Governing Council member Boris Vujcic on Tuesday calling it “very good news for everyone in Europe.”

UK economic growth almost ground to a halt in the third quarter after September’s activity was hit by a cyberattack on Jaguar Land Rover and the fear of looming tax hikes in the Labour government’s upcoming budget. Gross domestic product rose just 0.1% compared with 0.3% in the second quarter, the Office for National Statistics said Thursday. Economists and the Bank of England had forecast a gain of 0.2%. In September alone, the economy contracted 0.1% as modest growth in services was offset by a sharp decline in manufacturing. The pound dipped against the dollar after the data, but the move reversed as the US currency fell more broadly. Gilts were broadly steady. Britain has reverted to more pedestrian growth after outperforming every other Group of Seven country in the first half. From the housing market to surveys of business sentiment, evidence is mounting that consumers and companies are putting off spending decisions amid fears of big tax rises in Chancellor of the Exchequer Rachel Reeves’ Nov. 26 budget. “The big picture is that the economy is struggling to gain decent momentum in the face of higher taxes and soft overseas activity,” said Ruth Gregory, deputy chief UK economist at Capital Economics. “And with tax rises in the upcoming budget likely to trim GDP by around 0.2% in 2026, there is little reason to think that GDP growth will accelerate much from here.”

Company Events

SGK writes additional weekly commentary for clients of the firm detailing recent events and earnings of core equity holdings.

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