Perspectives Newsletter: Q3 2025
September shook off its reputation for the worst month of the year with a risk-on rally that took domestic indices up over 30% from their March lows. The September advance was particularly notable in that it occurred with liquidity coming out of the markets, something that had been a major headwind for risk assets since the Global Financial Crisis. Small cap stocks, as measured by the Russell 2000, rallied throughout the quarter and on September 19 notched a new all-time high, breaking a streak of 967 trading days without one. Once again, performance was concentrated in the largest stocks: the market cap weighted S&P500 nearly doubled the return of the Equal Weighted S&P’s return (4.84%). Growth stocks again handily outperformed value. Developed international markets were relative laggards in the quarter, though a strong first half still left them ahead of the S&P 500. The standout, both in September and for the quarter, was the Emerging Markets category. China was the star in this group, with local tech companies surging and a trade truce between the U.S. and China fueling a 20%+ rally. Bitcoin notched nearly all of its third quarter surge in the final month.
