Every quarter, we’ll highlight and explain a few of the key events that happened leading up to the quarter, as well as some takeaways and insight into the impact these events may have going forward. If there are any topics that you’d like us to touch on in the future, please reach out and let us know.
Q3 2025 Market Review
A More Active Federal Reserve
The Federal Reserve spent much of 2025 in “wait and see” mode, but decided in September that it was time to make a move, cutting its benchmark interest rate by 0.25 percentage points to a range of 4.0% to 4.5%. This move marked their first adjustment of the calendar year, but many economists believe it won’t be their last.
The chart below shows the expectations for the remainder of the calendar year and into 2026. While we can never say for certain what direction the Fed may take, both the market’s expectations and the Federal Open Market Committee’s year-end estimates indicate we’ll see more cuts before year end.
Record Breaking Large-Cap Concentration
The S&P 500 is a very popular market index that tracks the largest 500 companies in the United States. When someone reads “500 companies,” it would be understandable for them to view S&P 500 adjacent investments as well-diversified. After all, exposure to 500 companies may help limit one’s risk to the volatility of a smaller group of companies. The caveat, though, is that the S&P 500 does not treat all companies equally.
The S&P 500 is a market capitalization weighted index. Market capitalization rates are determined by multiplying a company’s number of outstanding shares of their company by their stock price. This market-cap weight then determines the weight and influence that their stock price’s movements have on the overall index.
One member of the S&P 500 index, Nvidia, for example, has a market capitalization rate that’s currently north of $4 trillion (with a T!), while another member of the S&P 500, CarMax, has a market capitalization of less than $7 billion (with a B). This means that the price volatility of Nvidia will have a much greater impact on the value of the S&P 500 index than that of CarMax, and the overall value of the index will swing much more widely with Nvidia’s movements.
While Nvidia gets many of the headlines, they are not alone. The chart below shows the market capitalization weighting of the top 5 and top 10 largest companies in the S&P 500.
Additional Headlines
We’ll finish this quarter’s Market Insights and Updates by giving a quick anecdote about a few of the economic headlines that we monitor:
| HEADLINE | QUICK OVERVIEW |
| Global Rate Cuts | U.S., Canada, ECB, UK, Switzerland, Sweden, Norway, China, and Australia all are on easing trajectories. Global monetary stimulus, occurring while the economy is strong and asset prices are high, implies that yield curves should be steepening. |
| Tariffs | Tariffs are expected to hit consumers in the fourth quarter as businesses slowly shift the tariff burden on to consumers. |
| Inflation | Tariffs, global trade friction, geopolitical tensions, rising input and labor prices, and monetary stimulus are all conspiring to keep inflation above the neutral rate. |
| The Economy | The modern economy has become reflexive to asset prices. Strong asset prices lead to a strong economy, and a strong economy leads to higher asset prices. |
| S&P Valuations | Several firms have called out S&P 500 Index valuations this quarter, highlighting that by most measures, valuations are at or near the highest in history. |
| AI Spending | Global AI capital expenditure has and is expected to continue to explode higher. Some have called out that this spending is circular, as each firm is simply paying each other. Similar to the internet bubble, this spending could easily disappoint if material benefits do materialize. |
| Dollar Weakness | Dollar weakness continues to provide a return tailwind for U.S. investors investing abroad. |
As always, we remain committed to guiding you through uncertain markets with clarity and purpose. If you have questions or would like to discuss your portfolio, don’t hesitate to reach out.
If there are any topics you would like us to address in future commentaries, please let us know.
Disclosures
This information has been prepared by Elevate based on data and information provided by internal and external sources. While we believe the information provided by external sources to be reliable, we do not warrant its accuracy or completeness. Nor should their use be construed as an endorsement.
Past performance is no guarantee of future returns. Performance shown represents total returns that include income, realized and unrealized gains and losses. Nothing presented herein is or is intended to constitute investment advice or recommendations to buy or sell any types of securities and no investment decision should be made based solely on information provided herein. There is a risk of loss from an investment in securities, including the risk of loss of principal. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will be profitable or suitable for a particular investor’s financial situation or risk tolerance. Elevate is not responsible for any trading decisions, damages or other losses resulting from this information, data, analyses, opinions or their use. Diversification does not ensure a profit or protect against a loss. All performance results should be considered in light of the market and economic conditions that prevailed at the time those results were generated. Before investing, consider investment objectives, risks, fees and expenses.
It is generally not possible to invest directly in an index. Exposure to an asset class or trading strategy or other category represented by an index is only available through third party investable instruments (if any) based on that index.
Elevate Wealth Management is a Registered Investment Adviser with the Securities and Exchange Commission, however, such registration does not imply a certain level of skill or training and no inference to the contrary should be made. The firm’s ADV Brochure and Form CRS are available at no charge by request at information@elevateasset.com or 307.461.5550 and are available on our website www.elevateasset.com. They include important disclosures and should be read carefully.