Quarterly Market Commentary

In this commentary, we recap the fourth quarter’s defining themes and events, review performance across key market areas, and look ahead to 2026.

Markets carried their strong momentum from the second quarter into the third quarter, with the S&P 500, Nasdaq, and Russell 2000 each hitting new highs. Investor sentiment remained optimistic despite soft labor market data and mixed economic signals, and stocks traded higher due to strong corporate earnings, the Federal Reserve’s resumption of rate cuts, and easing trade tensions.

The first half of 2025 was busy and eventful, but for all that happened, markets ended the first half not far from where they started the year. The S&P 500 returned 6.1% through the end of June after being down by over 15% at one point in April. Long-term interest rates, as measured by the 30-year U.S. Treasury bond yield, ranged from 4.40% to 5.10% but ended the first half of the year right where it started, near 4.80%. If one did not follow the markets closely, it might seem as though little had changed.

The stock market declined in the first quarter after two consecutive years of gains exceeding 20%. The year started off strongly, with the S&P 500 reaching a new all-time high in mid-February.

There was no shortage of market-moving events during a very active fourth quarter. The stock market opened the quarter with a slow start in October, but the outcome of the presidential election triggered a broad rally in November.