Quarterly Market Outlook 2025 - Q3
October 6, 2025
Happy fall to everyone. As the weather begins to moderate and the leaves begin to change in many parts of the country, we look to put some final thoughts on what to expect for the remainder of 2025. In order to accomplish this, it seems like the ever-shifting set of certainties and uncertainties must be addressed. This will help us understand the current landscape of global finance and how to best position our portfolios moving forward. First, we will discuss some issues that were uncertainties earlier in the year that have now had some resolutions.
Two of the major issues we were following at the end of the last quarter, the large policy bill known as the Big Beautiful Bill (BBB) and the question surrounding the Federal Reserve (Fed) lowering rates, have largely been answered. The BBB did pass through both houses of Congress and was signed by President Trump.[i] This gives us much more policy certainty than we have had for much of the year up to this point. Since most of the administration’s goals and priorities were included in this one piece of legislation, it does bring a little calm to the legislative priorities of the Republican Party. Also, many people had been calling for the Fed to lower interest rates as the growth in the United States had seemed to be slowing. As job openings shrank, there was a concern that higher interest rates could tip the U.S. economy into a recession. However, as the third quarter saw substantial downward revisions to job numbers, the picture became clearer, that the Fed was going to need to start reducing the interest rates in order to help keep the unemployment rate lower. In September, the Fed cut their target on the Federal Funds Rate 0.25% to 4.0-4.25%.[ii] This is the first rate cut in almost a year, and it comes with a softer message that the Fed is more concerned about unemployment than they were over the summer. Both the passing of the BBB, and the Fed beginning another cycle of cutting rates help give some policy certainty around what was a significant amount of uncertainty since the beginning of the year. However, while these items brought confusion, there are still some uncertainties to be considered and a new ones to be added.
The new uncertainty, that may or may not still be an issue by the time this letter goes to print, is the U.S. government shut down that began, in part, on October 1st, 2025.[iii] While it is never a good thing for the government to be forced to shut down due to lack of funding and all the damage it can cause, this type of shutdown has happened many times before. Forcing a government shutdown has become almost a form of bargaining between the Republicans and Democrats when negotiating what needs to happen to raise the debt ceiling.[iv] We always run the risk that the government shutdown could last for a longer time and cause enough damage to harm the economy. However, so far, the politicians have not let it get to that point. Therefore, while it is not good to have the government shut down, we do not believe it would end up materially impacting the investment markets unless something unforeseen and unprecedented happens.
Other uncertainties remain on President Trump’s emergency orders. While rulings have come out from the Supreme Court allowing the orders to stay in place until the cases are litigated, the Supreme Court itself has not ruled on the constitutionality of the declared emergencies. One of those declared emergencies dealing with President’s Trump’s unilateral enactment of tariffs could be ruled on soon.[v] That could lead to some short-term disruptions in the markets, but it will also give more certainty. Generally speaking, investment markets prefer certainty over uncertainty.[vi] Therefore, the markets could experience a short-term pullback but also be in position for better long-term appreciation, once the Supreme Court begins to rule on emergency orders. This is something worth following as it may impact which investments or sectors may be best positioned going forward.
Speaking of investment positioning, we have not had a substantial change in our views since January. We still believe that knowing what you own and why you own it will be more beneficial than a blind index. We still see the demand for energy outpacing the supply and believe owning exposure to the companies that supply that energy or the infrastructure for the datacenters being built is a good place to be regardless of what happens between the politicians. We still see the dollar continuing its decline and believe that investments that can benefit from an inflation-fueled dollar drop will continue to do well. While the dollar has mostly stabilized against foreign currencies since about July, we believe the purchasing power of the dollar for real assets will continue to decline.[vii] This decline in the dollar does not mean we are negative on the investment markets in the U.S. We expect there to still be some continued volatility in the short term followed by stable growth towards the end of this year and into the beginning of next year.
We hope everyone has had a great 2025 so far and has been able to stay safe, healthy and happy. 2025 has been a year defined by much change, but the stock markets are still near all-time highs, and we believe the future is bright. We hope you all have a wonderful end to 2025 and a very happy New Year.
Best wishes,
Christian D. Searcy, Jr. Melanie M. McDonald Vincent F. Cuomo
CFP®, CPWA®, AIF®, MBA CFP®, CEPA® Executive Partner
President Vice President, CCO
This material does not constitute a recommendation to buy or sell any specific security. Past performance is not indicative of future results. Investing involves risk, including the possible loss of principal investment.
Investment in equities involves more risk than other securities and may have the potential for higher returns and greater losses. Bonds have interest rate risk and credit risk. As interest rates rise, existing bond prices fall and can cause the value of an investment to decline. Changes in interest rates generally have a greater effect on bonds with longer maturities than on those with shorter maturities. Credit risk refers to the possibility that the issuer of the bond will not be able to make principal and/or interest payments. Index performance is presented for illustrative purposes only. Direct investment cannot be made into an index. The S&P 500 Index is an unmanaged index, which is widely regarded as the standard for measuring the U.S. stock market performance. It represents the 500 most widely held publicly traded companies.
[i] https://www.whitehouse.gov/articles/2025/07/president-trumps-one-big-beautiful-bill-is-now-the-law/
[ii] https://www.federalreserve.gov/newsevents/pressreleases/monetary20250917a.htm
[iii] https://apnews.com/article/government-shutdown-congress-trump-health-care-54b2a584657a0b619bc8326708a05604
[iv] https://www.bbc.com/news/articles/c1kw2wpnzwko
[v] https://subscriber.politicopro.com/article/2025/09/supreme-court-agrees-to-hear-trump-tariff-case-this-fall-00553726
[vi] https://www.cnbc.com/2025/03/19/why-uncertainty-makes-the-stock-market-go-haywire.html
[vii] https://finance.yahoo.com/quote/DX-Y.NYB/