Key Takeaways: Stocks surged 8% in Q3, led by tech gains, while bond yields dropped. Small-cap and value stocks rallied, with the Fed cutting rates for the first time in 2025. Gold hit a record high as global markets outperformed the US.

Stock Market Performance: Stocks rose 8% in Q3, with small-cap stocks outperforming in September. Nvidia reached a $4 trillion market cap, and IPOs rebounded. Analysts foresee continued market growth through the fall.

Value vs. Growth Performance: Growth stocks slightly outperformed value in Q3. Small-cap growth led, while large-cap tech stocks influenced market returns. The Morningstar US Small Cap Index trailed large-cap indices.

Stock Sector Performance: Tech and communication stocks soared, while energy and consumer sectors also saw gains. Healthcare stocks rebounded. Consumer defensives underperformed.

Dividend Stock Performance: Dividend stocks trailed the market but improved from Q2. The Dividend Composite Index rose 6.4%, with the US Dividend Growth Index up 7% and the Dividend Leaders Index up 4.8%.

Global Market Performance: International markets saw varied returns, with China leading and Europe lagging. Canadian and Japanese markets outperformed the US.

Fed Cuts Interest Rates: The Fed cut rates for the first time in 2025 to 4.00%-4.25%. Inflation and a cooling job market prompted the move, with more cuts expected.

Bond Market Performance: Bond yields fell as the Fed cut rates, leading to price appreciation. The US Core Bond Index returned 2.04%, with long-term core bonds seeing 3.26% returns.

Yield Curve Steepens: The Treasury yield curve steepened as short-term rates fell. Long-term rates decreased more slowly, signaling potential future rate cuts.

Cryptocurrency and Commodity Performance: Bitcoin rose 6.4%, while ether surged 65.5%. Gold prices soared 17.1%, with crude oil and copper prices falling.

Read more at Morningstar: 13 Charts on Q3’s Tech-Driven Stock Rally