There is no denying it: 2025 has been an eventful year for U.S. stocks. After the early bout of historic volatility—driven partly by tariff uncertainty, inflation worries, and trade tensions— U.S. markets have climbed strongly. The S&P 500 has delivered over 25 new all-time highs going into October.
Many times, to forge ahead, we need to look behind at where we have come from. Much of investing for the future is grounded in the trends, rates of change, and momentum of the past. To ignore that history is to move forward at your own peril.
Given what is in the rearview mirror, here is what we have learned, and why we remain cautiously optimistic for the remainder of 2025 and into early 2026.
1. Strong Earnings Support
A majority of companies across the S&P 500 have delivered resilient earnings despite tariff warnings, geopolitical headwinds, and inflation pressures. Not only have results held up, but forward guidance, led by Technology companies, has remained upbeat and helped sustain market confidence.
2. Federal Reserve (Fed) Policy Tailwinds
The Fed has officially begun to cut short-term rates, which will ease borrowing costs for both businesses and consumers, typically a growth-supportive move. At the same time, long-term rates remain respectively elevated due to ongoing growth and inflation expectations. This steepening of the yield curve suggests markets expect continued momentum, not recession.
3. Historical Resilience
Markets always look forward. Pullbacks and corrections can feel disruptive, but history shows that once investors gain clarity around Fed policy, inflation data, and earnings, recoveries follow. Importantly, markets seem to be rebounding from periods of volatility faster than before, as investors learn to separate short-term noise from long-term fundamentals.
4. Hope for Deregulation
Looking ahead, market participants expect additional progress on deregulation as the new administration advances its agenda. This could provide another potential tailwind for equities.
Here is how we are positioning:
- Diversification remains key: holding several quality investments helps mitigate risk and stabilize returns.
- Watch interest rate sensitivity: owning shorter-duration bonds which should benefit most in a steepening curve environment.
- Stay flexible: be ready to adjust asset allocation if Treasury yields or inflation surprise to the upside.
- Stay disciplined: avoid knee-jerk reactions; long-term, principled investing has always been the proven path.
Yes, markets are at all-time highs and that can be uncomfortable, and we do believe that inflation will accelerate into the end of the year. However, our portfolios have been constructed without concentrated risk and with the understanding that “owning” inflation is the best way to fight it. With thoughtful positioning, discipline, and a clear eye on what the bond market is signaling, we believe there’s a good path ahead for continued growth and resilience.