Q3 Market Review: Momentum Meets Uncertainty

As Q3 wraps up, markets showed both strength and complexity: U.S. equities hit new highs, the Federal Reserve delivered its first rate cut since 2024, and bonds regained support from easing expectations. At the same time, global tensions, softer labour data, and inflation risks remind investors that the road ahead won’t be straight.

Equities: The Rally Broadens Out

• U.S. stocks surged: S&P 500 climbed over 10% through mid-September.

• Record highs across the board: Dow, Nasdaq, and Russell 2000 all hit peaks on the same day, a rare synchronized momentum.

• Market breadth improves: Industrials, healthcare, and financials now support the rally alongside tech giants.

• Small-cap surge: Russell 2000 notched its first record close since 2021, boosted by expectations of lower interest rates.

• Global snapshot: Developed markets gained modestly; emerging markets faced pressure from commodity swings and geopolitical risks.

Fixed Income: Bonds Back in the Spotlight

• Treasury yields dipped, reflecting expectations of Fed rate cuts.

• High-yield bonds attracted inflows, as investors sought yield in a lower-rate environment.

• Stability for portfolios: Bonds cushioned volatility and delivered steady returns.

• Caution: Inflation remains elevated and duration risk is still key.

Economy: Strength with Strains

• U.S. GDP rebounded at 3.0% annualized in Q2.

• Labor market softening: Unemployment creeping higher, potentially pressuring consumer spending.

• Business sentiment: Slight improvement, yet below historical norms.

• Global context: U.S. growth outpaces peers, though trade frictions and tariffs remain headwinds.

The Fed: A Turning Point

• Rate cut: September saw the first Fed cut in over a year to 4.00–4.25%.

• Market reaction: Optimism fuelled equities and risk assets.

• Looking forward: Fed projections suggest more cuts in 2025, but inflation will influence the pace.

Global Perspective: Geopolitics in Focus

• Trade disputes and shipping disruptions in the Red Sea kept investors cautious.

• China: Stimulus offers upside, but trade frictions remain a drag.

• Diversification matters: Global risks highlight the importance of international exposure.

Looking Ahead: Constructive, but Cautious

• Tailwinds: AI innovation, broader market participation, and Fed support.

• Risks: Elevated valuations and geopolitical uncertainties.

• Investor takeaway: Opportunities exist, but balance and disciplined positioning remain key as we head into Q4.

🌍 At Intrasia Wealth, we see resilience and caution as complementary forces. As 2025 enters its final stretch, our focus is on capturing upside while managing risks effectively.