executive Summary
- New and small caps reached new all-time high in Q3
- Cyclic fields reach new relatives high versus defensive
- Gold has been performing its best annual per annum since 1979
- S&P 500 corporate income is estimated to increase 7.9% yoy in Q3
- All 11 are large- and small-cap sector positive ytd
- Stock and bond benefits during government shutdowns in the last 30 years
“Every bull market climbs up its wall of concerns” There is an old wall street saying that cannot be more apropos than what we are seeing this year. The list of market concerns in 2025 has been widespread, and has been increasing, starting with tariffs and trade wars, increasing geopolitical stress, inflation, policy uncertainty, social disturbance, cracks in the labor market cracks, soft housing data, and a government shutdown as today. Nevertheless, despite excessive volatility in the spring, S&P 500 has a 20% size dropdown, 25% for Nasdaq 100, and Russell with 30% for 2000, the stock market has returned to high record with healthy width and cyclical leadership.
Both September and Q3 were more across the wider American equity index boards. For S&P 500 and Nasdaq-100, September marked its 5Wan And 6Wan Constant monthly benefits respectively. And for S&P 500, it was 2Ra Best September (+3.6%) in 27 years.
The profit was wide-based by Russell 2000, which was taking the leadership baton in Q3 (+12.4% total returns) while reaching new height for the first time since November 2021, in short, in short, in short, in short, in short, in short.
Field performance
Large-cap sectors are led by defenders more than defensive in adjacent September (MTD) and Q2, and 2025.
Some of the high beta small-cap areas have seen more recovery from their 52-week offering due to their more sensitivity (beneficiary) part for low rates.
While the delay in tariffs increased the initial profit from April’s climb in Q2, continuous speed in Q3 was operated in part by re -starting the flexible economic data, corporate income strength, AI investment and a fresh rate cut cycle resumed.
Despite soft economic measures such as housing and consumer spirit being weak, the hard economic data used to define the recession (real GDP, industrial production, personal income, consumer expenses, etc.) is still in the uptrend. While August payrolls were disappointing, on the contrary, the opening of the initial claims and jobs is improving.
The core goods are pushing more due to the part of inflation tariff, yet the service inflation operated by housing and wages has slowed down in the last few years. The 5-year forward Brakeven, a common market-pose of inflation, is currently 2.31% and indicating that the market is seen in that level in search of five years.
Increase in corporate income for S&P500 Q2 had 12.7%, which was more than 7.2% expectations. More than 80% of companies defeated EPS estimates, which continued to have a line of earnings. According to the factset, for Q3 2025, the estimated income growth rate for S&P 500 is 7.9% YOY. Eight out of eleven sectors are expected to report an increase in income year-on-year income, which is led by information technology, utilities, materials, and financial sectors.
Federal reserve cut rate The September FOMC had 25 BPS, and the updated summary of economic estimates (SEP) was more dowish than anticipated. It showed an average expectation for 50 base points in addition to cuts in this year, as well as with the trend of better employment and economic development relative to June sep. The long UST 10YR yield (upper panel), the previous 4.12%, is below its January high 70bps, but more than 25bps from its April offering. However, a barometer of the fed policy, a small ust 2YR yield (lower panel), is testing a 3 -year support level at 3.55% level.
The US dollar stabilized in Q3 (+0.9%) after one of its worst first half on the index record. 1H 2025 declined by 10.7%for its worst 1H since DXY 1970, and its worst rolling 6 months since August 2009 (-11.2%) and February 2004 (-11%).
Weak dollar is a tailwind behind an increase in precious metals. Since August 2011, Gold had its best month (+11.9%), while silver (+17.4%) had its best month in more than five years (July 2020). Gold has been making its strongest annual profit (+47% YTD) since 1979, while Silver has been performing its best annual performance (+64% YTD) since 2010.
looking ahead
While uncertainty revolves around the length of the current government’s shutdown, historical data offers a confident perspective. According to NASDAQ’s economic research, the markets have well completed the shutdown in the last 30 years. The stock rose in the last five shutdowns (below charts), which was going back in the mid -90s, including +9% profit in the previous (35 days) shutdown (blue line). During the last five shutdown (middle chart), 10-year-old treasury yields fell, given the demand for safe-heaven (and often fell before the shutdown, too). The US dollar has been weak in 5/6 of the final shutdown (right chart). 1990 The last time American equities and/or bonds were down during a shutdown.
Given the “Message of the market”, we are encouraged to see clear partnership by Russell 2000 by the new high level …
Constant leadership from one of the top performing industries of this bull market, semiconductor…
Relative power in cyclic Equal weight discretionary index (Cycler) Definition vs. new height Equal weight staple index (Defensive)…
… And the bank was clarified by the bank, BKX index at new heights.
The information contained here is provided only for informative and educational purposes, and nothing vested here should be done as an investment advice on behalf of any particular security or overall investment strategy. All the information vested here is considered accurate and reliable by Nasdaq by Nasdaq. However, all information is provided “like” without any kind of warranty. Advice from securities professional is strongly advised.
