Strong Gains!
Artificial Intelligence stocks led the way for market growth in the 3rd Quarter of 2025. We also got the long-awaited Federal Reserve interest rate cut. The Federal Reserve reduced the Fed Funds rate by .25 basis points (bps) from 4.25%b to 4.00%. This action, coupled with a weaker US dollar, paved the way for global stocks, bonds, digital assets and commodities to claim strong gains this quarter.
The S&P 500 and NASDAQ Composite posted record highs. The Federal Reserve interest rate cut, with the expectation that more cuts are to follow, strong corporate earnings and the AI boom accelerated market growth. Technology and communication stocks led the way. Healthcare and energy stocks slumped due to pressure from MAHA policies and the administration’s goal of ramping up oil production to bring down fuel costs equating to lower profits for energy sector companies. Additional bright spots in the US economy included the growth of Gross Domestic Product (GDP) and strong consumer spending as core inflation continued cooling.
International markets posted strong gains with core inflation being subdued to the European Central Bank’s inflationary target of 2%. Growth in the financial and healthcare sectors benefited from lower interest rates and strong corporate earnings. US tariffs remained a nonissue for the price appreciation of goods and services.
Despite inflationary pressures in the food and energy sectors, the Bank of England cut interest rates for the first time since 2020 with expectations that lower interest rates will fuel borrowing to stimulate consumer consumption. The United Kingdom’s markets pushed higher experiencing similar growth to the US and Europe, fueled by strong corporate earnings in the Artificial Intelligence (AI) and commodities sectors. Gold and silver hit all-time highs. The FTSE 100 posted strong market growth not seen since 4th quarter of 2022.
Japanese markets faired the same as its global counterparts soaring to new highs led by an increase in investors risk inclination spurred by positive pro-business reforms leading to increased corporate dividend payouts and share buybacks. Volatility was elevated due to the elusive recovery in corporate earnings.
Emerging Markets indexes posted double-digit returns with the Pacific Rim leading the way. Positive US trade talks with China and an easing of tariff tensions paved the way for advances in the Chinese, Taiwan, and South Korean markets. These tech centered economies gave AI investors the fuel needed to satiate their appetites for market growth.
The bond dilemma continued as interest rates globally began to drop because central banks around the world lowered interest rates. This was due to a consequence of moderate to lower inflation. Savers watched the yields on their savings accounts, money markets, and bonds drop as prices rose. A healthy balance of interest rate declines and price appreciation is the goal. However, as interest rate policies push yields lower, risk adverse investors and savers are forced to seek growth and yield in riskier asset classes like stocks and high yield bonds.
Our role at Renew Family Wealth is to invest for our clients and provide a healthy balance between risk and reward. If you are uncertain about how current market conditions are affecting your investments or would like a second opinion as to whether your portfolio can weather future market conditions, we would welcome the opportunity to assist you. Please contact us for an evaluation with the goal of providing you with peace of mind.
Thank you to all those who are currently partnering with us at Renew Family Wealth. We are sincerely grateful for the opportunity to serve you.
Sincerely,
Scott Miller
