Q3 2025 Market Insights

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.

In the fourth quarter, the S&P 500® rounded the corner on its second straight year of 20%-plus gains––reaching 24.99% for 2024 with a 2.39% return––marking its best two-year performance since 1997-1998. In response to the election of Donald Trump, investors have embraced the prospects of deregulation, reductions in corporate taxes, and a renewed focus on trade protectionism aimed at prioritizing domestic industries. With inflation data still well above the Federal Reserve’s 2% target rate, the coming year could put upward pressure on medium and long-term bond yields. In 2025, the interplay between asset classes will remain a defining characteristic of the global investment landscape, making a well-structured, long-term, and diversified asset allocation essential for investors hoping to navigate this evolving environment with confidence.