Q3 2025 Update: Stocks Push Higher as Growth Holds

Ronnie Jenkins
Oct 13
2 min read

The third quarter of 2025 extended the stock market’s “U.S. Resilience” theme. Growth remained firm even as unemployment edged up, and stocks pressed higher - driven by strong earnings, ample liquidity, and a Federal Reserve that’s back to cutting rates.

Market Momentum Builds

The S&P 500 gained roughly 8% in Q3, led by technology, consumer, and communication sectors. AI remains the story of the year, fueling both corporate investment and investor enthusiasm. While some call it a bubble, we view it as an early-stage buildout - comparable in narrative power to the early internet. The difference today is that many companies funding this expansion have real earnings and strong balance sheets. While some market segments appear frothy, we believe the overall AI trend is still early innings.

Fed Cuts and Fiscal Tailwinds

The Fed restarted its easing cycle as the labor market softened, and two more cuts are widely expected before year-end. History shows that when the Fed cuts without triggering a recession, stock markets tend to perform well. That combination - moderate growth and easier policy - continues to anchor our constructive outlook for stocks and the economy.

Year-End Setup

Liquidity remains abundant, credit spreads are tight, and corporate earnings revisions have been the best in nearly 4 years. Add in favorable seasonality - November and December are historically strong for stocks - alongside a dovish Fed, and the setup into year-end remains bullish.

Bottom line

Stocks are showing staying power. As long as growth holds and policy stays supportive, the path of least resistance for stocks remains higher. As it relates to housing, the wealth-effect from a rising stock market should remain in full force, helping buoy home prices to some degree.

To read our full market outlook and commentary, please click here.