Market Commentary September 30, 2025

Market Commentary September 30, 2025

Financial markets remained hot in the third quarter with both stocks and bonds continuing to expand their gains for the year.  The S&P 500 had another strong quarter up 7.8% in Q3 and is up 13.7% year-to-date (YTD). The S&P 500 Equal Weighted (S&P EW) ended the quarter up 4.4%, and 8.4% YTD.  International stocks continued to have a great year with the MSCI EAFE Index up 4.2% in Q2 and up 22.3% YTD. Bonds were up as well in Q3 as the Bloomberg US Intermediate Term Corporate Bond Index increased 2.0% in the quarter and 6.6% YTD. 

In equities the third quarter saw a continuation of the shift in risk appetite that began the previous quarter. While the year started on a cautious tone, growth stocks have fared well since spring and were joined by small cap stocks in outperforming the market overall in the last quarter.

Markets were buoyed by a combination of resilient corporate earnings, improving economic data, and a shift in monetary policy. The Federal Reserve cut interest rates by 25 basis points at its September meeting, the first cut of the year, bringing the federal funds rate to a range of 4.00%–4.25%. The move was prompted by signs of labor market weakness, including a four-year high in unemployment at 4.3% and downward revisions to prior months’ job growth. The Fed also signaled two additional cuts may be forthcoming before year-end, though continued to emphasize a data-dependent approach.

Relative to past quarters, there was less overall volatility in bond markets in Q3 2025.  Overall, US dollar borrowing rates came down slightly, resulting in slightly positive bond index performance for the quarter. 

Inflation remained elevated but stable, with core PCE inflation projected at 3.1% for the year. GDP growth estimates for Q3 ranged from 2.1% to 3.9%, with consumer and government spending driving the recovery.

The Atlanta Fed’s GDPNow model projected 3.9% growth as of late September, suggesting the economy remains on solid footing despite earlier concerns.

Geopolitical tensions remained elevated, particularly in the Middle East. A brief military conflict between Israel and Iran in June, followed by U.S. involvement, raised concerns about energy prices and global stability. However, a ceasefire and limited disruption to oil supply helped calm markets. Domestically, the Trump administration’s “Liberation Day” tariff plan continued to evolve. While a global minimum 10% tariff was introduced, implementation delays and exemptions for key partners helped reduce market anxiety.

The administration also made progress on fiscal policy, with the “One Big Beautiful Bill” extending 2017 tax cuts and introducing new deductions. While the bill is expected to boost GDP, it also raises concerns about long-term deficits.

As we enter the final quarter of 2025, markets remain cautiously optimistic. The Fed’s pivot toward lowering interest rates, strong corporate earnings, and resilient consumer spending have supported stocks. However, inflation, labor market softness, and geopolitical uncertainty remain key risks.

Early in the year we noted that since 1929 there have only been five instances of three years in a row of double-digit S&P 500 returns, with the most recent being 2019 through 2021.  While the fourth quarter is far from over, if equity markets hold their gains we would once again see three consecutive years of double-digit returns. Additionally, it would make 6 out of the last 7 years for double-digit returns in the S&P500, which hasn’t happened since 1949-1955.

As always, if you have questions regarding your portfolio, please consult your financial advisor. We appreciate your continued trust in SG Long Financial and look forward to working with you in the future.

Rob Richardson, CFA

Chief Investment Officer

Important Disclosures

Past performance is no guarantee of future results. Investing involves risk, including the possible loss of principal. The S&P 500 Index is a recognized benchmark used by investors and the investment industry for the equity market. Indexes are not a managed portfolio and are not subject to advisory fees or trading costs.  Investors cannot invest directly in the S&P 500.  Indexes and/or market benchmarks references used throughout this report remain the copyrighted property of their respective owners. Before investing, please carefully consider your investment objectives, risks, charges, and expenses. Views expressed do not necessarily represent the views of S.G. Long Financial Service Corp. (“SGLFS”) and are subject to change at any time based upon market or other conditions. The information provided is for general informational purposes only and should not be considered individualized or personalized investment advice.

SGLFS is the parent company of S.G. Long & Company and SGL Investment Advisors, Inc. S.G. Long & Company is a broker-dealer registered with the SEC, a FINRA member firm and a state-registered investment advisor. SGL Investment Advisors, Inc is a SEC registered investment advisory. Clients and employees of SGLFS may maintain positions discussed herein.