Equity markets continued to shrug off the tariff-induced volatility that roiled stocks earlier this year. The S&P 500 returned 14.8% year-to-date through September 30. This performance was driven by AI-related names and more speculative, lower-quality stocks. Low quality outperformed high quality by nearly ten percentage points among both large and small cap stocks. The 109 stocks in the Goldman Sachs US TMT AI Basket (which is a mix of low- and high-quality stocks) returned 42% YTD and their combined market capitalization totaled approximately $25 trillion dollars – over 40% of the market capitalization of the S&P 500. Foreign equity indexes outperformed but with significant return dispersion among sectors and countries. European banks and defense stocks drove the MSCI EAFE. China, along with South Korean and Taiwanese semiconductor stocks contributed to the outperformance of emerging markets. India, the best performing emerging market over the last decade, significantly underperformed.
3rd Quarter 2025 Market Commentary
Equity markets continued to shrug off the tariff-induced volatility that roiled stocks earlier this year. The S&P 500 returned 14.8% year-to-date through September 30. This performance was driven by AI-related names and more speculative, lower-quality stocks. Low quality outperformed high quality by nearly ten percentage points among both large and small cap stocks. The 109 stocks in the Goldman Sachs US TMT AI Basket (which is a mix of low- and high-quality stocks) returned 42% YTD and their combined market capitalization totaled approximately $25 trillion dollars – over 40% of the market capitalization of the S&P 500. Foreign equity indexes outperformed but with significant return dispersion among sectors and countries. European banks and defense stocks drove the MSCI EAFE. China, along with South Korean and Taiwanese semiconductor stocks contributed to the outperformance of emerging markets. India, the best performing emerging market over the last decade, significantly underperformed.
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