Third Quarter 2025 Recap: Bullish Trends & Sector Standouts
Key Takeaways
We remain bullish: the April tariff-related sell-off likely marked the start of a new cyclical bull market that could extend for several years.
Leadership remains concentrated in technology, communications, and consumer-oriented growth stocks.
Interest-rate-sensitive sectors such as materials, utilities, and real estate continue to lag.
Equities lead bonds and gold on a relative-strength basis, confirming an “offense on the field” posture.
We are maintaining an offensive but disciplined stance—participating in upside while managing risk exposure.
Market Overview
After a turbulent start to the year, the market strengthened throughout the third quarter. What began as a tariff-driven sell-off in April now looks increasingly like the beginning of a new cyclical bull market. Investor sentiment has improved steadily, volatility has stayed contained, and technical evidence continues to point toward strength in risk assets.
We remain constructive on equities and believe the path of least resistance is still higher. While periodic corrections are likely, the combination of strong trend structure, stable credit conditions, and expanding leadership across several sectors supports our view that this bull market could have years rather than months left to run.
Equities and Sector Leadership
U.S. stocks again led global markets in the third quarter, with the S&P 500 and other major indices reaching new all-time highs. The rally broadened modestly to include mid- and small-cap companies, though large-cap growth continues to dominate leadership. Technology and consumer discretionary remain at the top of relative-strength rankings, while industrials and financials improved as interest-rate pressures eased.
The chart below highlights the performance of major asset classes since January 2024, rebased to 100 on a daily basis for greater granularity. Equities clearly remain in leadership mode versus bonds and gold, underscoring the durability of the uptrend.
Source: Factset. Data as of 10/10/2025.
Sector Performance Since the Market Bottom
Since the April market low, leadership has been concentrated in a handful of cyclical and growth-oriented sectors. Information Technology, Communication Services, and Consumer Discretionary have been the three strongest performers, rebounding sharply from the spring pullback and extending to new highs by late summer. Each benefited from strong earnings momentum, productivity gains, and renewed enthusiasm around artificial intelligence, digital infrastructure, and consumer resilience.
Conversely, Materials, Utilities, and Real Estate have lagged, reflecting their sensitivity to interest rates and financing costs. Their underperformance underscores the market’s continued preference for innovation and profitability over defensiveness and yield. While these sectors may present selective opportunities as the cycle matures, leadership remains firmly with areas tied to technology and economic growth.
For investors, the message is clear:
Trend persistence matters—markets continue to reward sectors with positive momentum and visibility.
Interest-rate sensitivity divides winners from laggards—defensive sectors have yet to regain traction.
Diversification provides flexibility—concentrated leadership can persist, but balanced exposure prepares portfolios for eventual rotation.
International and Fixed-Income Trends
Developed international markets—particularly Europe and Japan—showed modest improvement as monetary policy abroad remained supportive and the U.S. dollar stabilized. Emerging markets continue to lag but have shown early signs of base-building.
Fixed income posted modest positive returns. Treasury yields held in a narrow range between roughly 4% and 4.5% as inflation eased and the Federal Reserve implemented its first rate cut since 2024. Credit spreads stayed contained, reflecting confidence in the broader economy. Precious metals extended gains, while energy and industrial commodities were more subdued.
Our Outlook
We continue to view current conditions as the beginning of a new cyclical bull market—one that likely began in the aftermath of April’s tariff-related sell-off. Economic fundamentals remain favorable, inflation is trending lower, and monetary policy has turned from restrictive toward neutral.
From a relative-strength standpoint, the evidence still supports maintaining offense on the field. We are participating in prevailing leadership while remaining vigilant for rotation. In short, we remain bullish but disciplined—seeking to capture opportunity while managing risk in alignment with our long-term, evidence-based process.
Emerald Asset Management is an independent, boutique Registered Investment Advisory firm based in Rocky Mount, NC, serving successful executives, business owners, and high-net-worth individuals across Raleigh, Durham, and Chapel Hill. As a fiduciary-led firm with over 30 years of experience, Emerald provides research-driven investment management and strategic financial planning. The firm specializes in individually managed stock and bond portfolios, alternative investments, and risk management strategies. With a disciplined approach and a commitment to clarity, Emerald helps clients navigate complex financial decisions with confidence. They can be reached at (252) 443-7616 or on the web at www.emeraldam.com.
Emerald Asset Management, Inc. is an SEC‑Registered Investment Adviser. Registration does not imply a certain level of skill or training. This material is for informational purposes only and does not constitute investment advice or an offer to buy or sell any security. Past performance is not indicative of future results.
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