Stocks and Bonds Rally on Strong Q3 GDP Report

Good morning, and welcome to the holiday-shortened and final days and week of 2025.

The Dow (+1.2%), NASDAQ (+1.2%), and S&P 500 (+1.4%) each gained modestly in the holiday-shortened week.  Similarly, taxable bonds and tax-free municipal bonds gained modestly, rising 0.2% and 0.1%, respectively.  The 10-year Treasury yield fell 0.02% to finish the week at 4.13%.

Amid a slow week for economic news and a reduced number of folks on Wall Street because of the holidays, trading volume was substantially lower than normal.  However, stocks rallied on the release of the Q3 US Gross Domestic Product (GDP), which is a measure of the US economy.  The GDP report came in at 4.3%, substantially exceeding economists’ and investors’ expectations of 3.0%.  Upon further analysis of the GDP report, it is believed that the biggest drivers were likely a productivity boom and a decline in the savings rate.  Compared to the rest of the world, US growth appears to be widening (and not just limited to AI-related companies) relative to the rest of the world.  In addition, US corporate profit growth is on track to be the strongest in the world for 2025.

Next week, we will be reporting on how the entirety of 2025 performed.  One week later, we will be filming quarterly episodes of our weekly podcast that will air on January 14 and 21 (and possibly January 28, if we film three episodes).  Those will be with our CFA consulting team and will discuss the results of 2025 and what to look forward to in 2026.  Until then, we all wish everyone a Happy New Year and a safe ending to the holiday season.  Have a wonderful day and terrific week and also note that our CFA consultants also did not provide their normal weekly recap, in case you were looking for the attachment.

Source:  Yahoo Finance

^{Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.}

^{The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.}

^{The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The NASDAQ Composite Index measures all NASDAQ domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index. Government bonds and Treasury bills are guaranteed by the US government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.}