Skip to main content Skip to footer 
The third quarter of 2025 delivered a robust performance for global markets, navigating seasonal headwinds and policy shifts to post impressive gains. The S&P 500 advanced 7.4% for the quarter, reaching new all-time highs and capping off its best September in 15 years with a 3.3% monthly gain.
Internationally, developed markets outperformed, with the MSCI EAFE Index climbing approximately 9.5%, driven by strong performances in European industrials and Japanese exporters amid easing trade concerns. In fixed income, the Federal Reserveโs rate cut on September 17 to a 4.00%-4.25% range supported a 2.5% return for the Bloomberg U.S. Aggregate Bond Index, though 10-year Treasury yields rose to around 4.2% by quarter-end, reflecting shifting yield dynamics.
Economic resilience underpinned these gains, with U.S. GDP growth for Q2 revised upward to 3.8% annualized, fueled by strong consumer spending and business investment despite a softer Q1 contraction of 0.6%. The AI-driven rally continued to dominate, with the โMagnificent Sevenโ tech giants driving significant index gains, while the Russell 2000โs 4.8% rise signaled broader market participation. Geopolitical tensions and tariff discussions sparked intermittent volatility, yet global stocks added $5 trillion in value over the quarter. The quarter closed with a new challenge: a U.S. government shutdown began on October 1, potentially delaying key economic data like the September jobs report and introducing near-term uncertainty.
As we head into Q4, markets face a dynamic landscape with potential volatility from the shutdown and ongoing policy adjustments. Investors should monitor upcoming PMI data and any rescheduled labor reports for economic insights, while opportunities in undervalued international equities and U.S. value stocks could provide diversification. With 2025 growth projected at 1.8%, Q3โs strength highlights the marketโs adaptability, setting the stage for a compelling year-end.
Market Related Items from Q3 2025
Septemberโs Historic Rally: Defying its reputation as the weakest month for stocks (averaging -1.2% for the S&P 500 since 1950), September 2025 delivered a 3.3% gain for the S&P 500 and 5.3% for the Nasdaq, marking their best September in over 15 years.
All-Time Highs Galore: All major U.S. equity benchmarksโthe S&P 500, Nasdaq, Dow Jones, and Russell 2000โhit fresh all-time highs in Q3 2025, driven by AI optimism and global recovery signals.
Shutdown Shock: The U.S. government shutdown starting October 1, 2025, the first since 2019, could delay critical economic data releases, reminding investors that fiscal policy can still disrupt even the strongest market momentum.
