Equity Strength in Q3 Shows Signs of Broadening

Despite inflation concerns and revealed weakness in the labor market, equities rallied in Q3 with market participation broadening amid improving trade policy, rate cut optimism, and better than feared corporate earnings. Both the Nasdaq Composite Index and S&P 500 Index notched their best Q3 since 2020, as well as their best September in 15 years despite the month’s poor seasonality. For the quarter, US growth (+9.8%) was among the best performers, followed by emerging markets (+9.5%) and US small-caps (+9.2%). Bonds fared well as munis rose 2.7%, investment grade corporates gained 2.7%, and high yield credits increased 2.4%. Commodities produced positive returns as silver was up 29.1%, gold rose 16.6%, broad-based commodities increased 3.7%, and crude oil gained 0.9%.