May Market Update

Financial markets delivered broad-based gains in the third quarter of 2025, reflecting optimism around easing trade tensions, easier financial conditions, and resilient corporate earnings. Revisions to previously reported job data have provided the Federal Reserve with greater flexibility to implement additional interest rate cuts. Corporate earnings growth, led by technology and AI-related sectors, has been strong, and the passage of the One Big Beautiful Bill Act is expected to provide an additional near-term tailwind toward improved profitability. The combination of looser monetary policy and solid earnings growth should create a constructive environment for equities in the near term. We highlight the constructive environment for equities in the near term.

Amid geopolitical shocks and sweeping new tariffs, the S&P 500® Index surged 10.78% for the quarter, reaching an all-time high. While market volatility reflected uncertainty around trade policy and global conflict, long-term fundamentals—including inflation, earnings growth, and monetary policy—remain the key drivers of performance. With interest rates likely to stay elevated, corporate earnings—especially among AI-driven firms—are poised to play a central role in shaping returns. We highlight the importance of staying focused on fundamentals, avoiding short-term noise, and maintaining a long-term investment perspective.

Amid widespread concern over U.S. trade policy, the S&P 500® Index posted its worst quarterly return in nearly three years, declining 4.28%. After weeks of uncertainty and anticipation, the Trump administration implemented sweeping tariffs on nearly all imported goods, creating a complex and fluid equity market for U.S. investors. While the potential impact of prolonged trade disputes remains unknown, economists believe the odds of a near-term recession will remain low as long as the country’s labor market continues to grow. Against this backdrop of unpredictability and ongoing instability, we highlight opportunities for investors to adapt in a turbulent market and realize long-term growth by enduring temporary downturns with confidence.