Quarterly Market Summary
The third quarter of 2025 may be best characterized by continued strength in the equity market, moderating yet resilient economic activity, and a shift in the Federal Reserve's policy toward interest rate cuts. U.S. stocks experienced robust growth in the third quarter, with each of the major indexes reaching multiple record highs, despite economic policy uncertainty, primarily driven by the impact of tariffs and lingering geopolitical risks.
In what may be the most significant development of the quarter, the Federal Reserve cut the federal funds rate by 25 basis points in September, marking the first rate cut since the end of 2024. Despite the rate cut, inflationary pressures remained a key concern. The labor market slowed to a near standstill in the third quarter, which likely contributed to the Fed's decision to cut rates. Job growth slowed significantly, the unemployment rate moved higher, and the number of job openings fell to its lowest level since 2021. Corporate earnings reached new highs in the third quarter. The U.S. economy, as measured by gross domestic product, showed resilience. At the same time, the U.S. real estate market continued to be impacted by relatively high interest rates, low inventory, and rising home prices. However, August showed home prices began to fall and inventory increased. Mortgage interest rates started to decline, with Fannie Mae forecasting 30-year fixed mortgage rates to end 2025 and 2026 at 6.4% and 5.9%, respectively.
International Markets
September saw the global economy and stock markets largely driven by the ongoing effects of new trade policies, evolving central bank strategies, and persistent inflation concerns. Shifts in trade policy, particularly stemming from higher U.S. tariffs on a broad range of imports, prompted companies to accelerate shipments (“front-loading”) in the first half of the year, which temporarily boosted trade figures, but the effects of the actual tariffs began to increasingly weigh on global industrial production and trade in September. The eurozone economy maintained a modest growth pace, with services activity driving the increase, although manufacturing was slower, while inflation accelerated. Economic indicators in China pointed to weakness as the boost from front-loading trade activities unwound, higher tariffs took effect, and weakness in the real estate market persisted. In September, the STOXX Europe 600 Index rose 2.7%; the United Kingdom's FTSE advanced 2.6%; Japan's Nikkei 225 Index gained 6.2%; and China's Shanghai Composite Index ticked up 0.6%.
On A Personal Note
Jeff started a new photography class. He is looking to get more experience with the camera, as golf season starts to wind down. Even though Drew and Stephanie just dropped their daughter off at college, they have already been back to visit her for parents' weekend. She is having a great time and even getting good grades. Mom and Dad had a good time too! Chris was able to meet up with his college roommates for a weekend in Tennessee. They had a great time laughing and talking about old times together. Lisa did some volunteer work last month for two amazing charities. The first was at the Loveland Oktoberfest for CancerFree KIDS and the other was for the Teal Power Walk for ovarian cancer. Sam welcomed the start of fall, cooler weather, and football season. It's his favorite time of the year! September was a blur for Taylor – parenting, working, maintaining the house, etc. Somehow it is already October and time to pick baby's first Halloween costume!
