Quarterly Newsletters

Quarterly Newsletter for the 3rd Quarter 2025

 The third quarter continued to provide us with positive equity returns both domestically and abroad. On a price return basis, the Dow Jones Industrial Average (DJIA) gained 5.22%, the Standard and Poor’s 500 (S&P 500) picked up 7.79% and the NASDAQ rewarding us with an impressive 11.24% return for the quarter ending September 30. Thus, year-to-date, the DJIA is up 9.06%, the S&P 500 is up 13.72% and the NASDAQ is up 17.34%. Overseas, the MSCI All Country World ex-US Index, that posted positive returns in the first and second quarters, continued its rally with another 6.89% return in the third quarter. This brings its year-to-date return to an impressive 26.02%. The Emerging Markets, following suit, added an additional 10.64% gain for the quarter- produced a 11.99% return for the year. In the fixed income environment, the Merrill Lynch 3-month Treasury Bill Index yielded 1.08% and the Bloomberg Aggregate Bond Index returned 2.03% for the quarter- putting their year-to-date yields at 3.17% and 6.13% respectively. 

Fixed Income Market (Bonds): As an outcome of its September meeting, the Federal Reserve announced a widely anticipated rate cut of 25 basis points (0.25%). Citing concerns about the labor market and slowing economic activity, this is its first rate cut in nearly a year. While well below peak levels, inflation rates remain stubbornly above the Fed’s target rate of 2%. This inflation is driven primarily by higher food prices and increased energy costs. Oil/gasoline prices are, however, dropping drastically. Tariffs have had little impact thus far. As we write this newsletter, the Federal Government is in shut down mode with politicians unable to reach a compromise over the budget. Unfortunately, most of the relevant data that the Fed relies on to make its decisions comes from Federal offices. Absent this data, the Fed may find it difficult to make decisions going forward. The bottom line is that money growth is subdued, shelter inflation is moderating, commodity pressure is contained, and the labor market is cooling (but not cracking). This is precisely the recipe for the Fed to continue easing. Most economists predict at least one and possibly two additional rate cuts this year.

US Equity Markets (Stocks): The third quarter continued its recovery momentum with revised annualized GDP (Gross Domestic Product) for the second quarter, estimated at almost 4%. This market is driven by strong consumer spending, resilient business investment, and a rebound in business inventories following tariff-related disruptions earlier this year. Despite concerns about the labor market and inflation, the equity markets remain strong and resilient. Household debt is well below the levels typically seen in recessionary periods, M2 Money Supply (an estimate of all cash, money market, saving account, checking accounts, etc.) is high, and corporate earnings are impressive- beating expectations. With $7 trillion sitting in money market accounts and a robust enthusiasm for AI, the equity markets appear to be poised for further growth. The wild card for this quarter will be the effects that tariffs and their pricing pass-through have on retail spending. Regardless, as long corporate earnings are strong, money from cash sitting on the sidelines should flow into the market on every pullback and produce positive returns through year-end.

Overseas Equity Markets (Stocks): For the first time since 1999, the overseas markets are outperforming the US stock market. We continue to see some areas of concern- particularly the war between Russia and Ukraine
and the trade tension between the US and China. Tariffs are, of course, still a threat to international trade. Regardless, overseas central banks are very accommodative, and geopolitical pressures seem to be minimal. Fiscal expansion and lower effective tariff rates in some jurisdictions support continued positive returns from the overseas markets.
 

In conclusion, we remain positive about the U.S. market and think it will produce additional returns through year end. In mid- October the US stocks celebrated its third anniversary of a bull market. The majority of 3- year bull markets have been followed by an additional positive year. We continue to contend that the overseas market is undervalued compared to the US market; thus, we remain positive about these investments. Regarding the fixed income environment, we are neutral- stay the course. We favor short and intermediate term investments. Permit us to express our sincere appreciation for the opportunity to be of service to you. As always, should you have any questions or wish to discuss the above in more detail, please do not hesitate to contact us.
Sincerely,
COMPREHENSIVE FINANCIAL PLANNING, INC.

Investment advisory services offered through Comprehensive Financial Planning, Inc, a registered investment adviser