U.S. Markets
Stocks powered ahead in the third quarter as solid economic data, strong corporate results, and a positive shift in Fed policy drove market momentum.
The Standard & Poor’s 500 Index advanced 7.79% while the Dow Jones Industrial Average gained 5.22%. The tech-heavy Nasdaq Composite led the way, gaining 11.24%.1
A Jumpstart in July
Stocks rose steadily in July as investors viewed economic updates, trade development, and second-quarter corporate results in a positive light. The White House announced a trade agreement with Japan, which helped push the Nasdaq above 21,000 for the first time.2,3
Investors largely yawned at the news of the trade agreement between the U.S. and the E.U., but were unsettled when the Fed decided to hold rates steady at the end of the month.4
An August Advance
In August, a sluggish jobs report, followed by upbeat inflation news, appeared to crack the door for the Fed to adjust short-term rates.5
Stocks pushed higher after Fed Chair Powell, speaking at the Fed’s annual symposium in Jackson Hole, contended that the downside risk of employment is greater than the upside risk of inflation.
To investors, that seemed to indicate that the Fed was ready to move.6
A September Splash
September’s markets slowly built momentum as tech stocks rallied, accelerating further following the Fed’s long-anticipated rate cut.
Powell’s cautious comments about valuations rattled the markets for a day, but stocks ended the quarter on a powerful note despite the Congressional budget deliberations.7
The Dow closed the quarter at an all-time high, while the S&P 500 and Nasdaq closed just below their all-time peaks.8
What Investors May Be Talking About in October
By mid-October, companies will start to report their third-quarter corporate results.
Two key drivers of stock prices are earnings and the value investors are willing to pay for those earnings. So, expect Wall Street to watch the corporate reports and look for any insights into 2026.10
Later in the month, investors will get the advance estimate on third-quarter gross domestic product.
Economists have been revising their GDP outlooks higher since August, with some estimates topping three percent. Wall Street will want to learn what’s driving growth as they start to make their 2026 outlooks.11
World Markets
The MSCI EAFE Index rose 4.23% in Q3. While it trailed all three major U.S. markets in Q3, it’s up 22.34% year to date.12
Most European markets advanced over the course of the quarter. Spain (+10.60%), Italy (+7.37%), the United Kingdom (+6.73%), and France (3.00%) posted the best gains for the quarter. Germany (-0.12%) lagged.12
Pacific Rim markets posted solid gains. China added 11.56%, South Korea picked up 11.49%, and Japan rose 10.98%. Australia (+3.59%) and Mexico (+9.51%) also had a strong Q3.12
The Fed
The Fed convened two official meetings and its annual symposium in Q3.
The Federal Open Market Committee (FOMC) held rates steady at its July meeting and hinted at growing concern for the labor market at its symposium in Jackson Hole, Wyoming.
In his symposium speech, Powell highlighted the “curious” situation in an apparently stable U.S. labor market where the supply of and demand for workers were dropping, and made the case that some softening in the labor market would act as a check against inflation.22
At its September meeting, the FOMC not only lowered rates by a quarter percentage point but also telegraphed that more adjustments were being considered before year’s end. The widely expected cut in September brought the Fed Funds Rate to a 4.0–4.25% target range.23
The Federal Reserve has two more scheduled meetings this year: on October 28-29 and December 9-10.
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1. WSJ.com, September 30, 2025
2. CNBC.com, July 3, 2025
3. CNBC.com, July 23, 2025
4. CNBC.com, July 30, 2025
5. CNBC.com, August 13, 2025
6. CNBC.com, August 24, 2025
7. CNBC.com, September 18, 2025
8. CNBC.com, September 30, 2025
9. Sectorspdrs.com, September 30, 2025
10. Bankrate.com, January 14, 2025
11. AtlantaFed.org, September 30, 2025
12. MSCI, September 30, 2025
13. WSJ.com, September 25, 2025
14. MarketWatch.com, September 5, 2025
15. WSJ.com, September 16, 2025
16. KPMG.com, September 16, 2025
17. KPMG.com, September 17, 2025
18. CNBC.com, September 25, 2025
19. CNBC.com, September 24, 2025
20. WSJ.com, September 11, 2025
21. KPMG.com, September 25, 2025
22. WSJ.com, August 23, 2025
23. WSJ.com, September 17, 2025
24. NRF.com, August 19, 2025
25. Reader’s Digest, July 17, 2025
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