Marketpoint: Resilience Amid Transition
The third quarter of 2025 marked a shift in both market dynamics and monetary policy. After navigating the tariff-driven volatility of the first half, equity markets posted their strongest quarterly performance since 2020, with the three major indices advancing steadily to new record highs as the Federal Reserve began its long-anticipated pivot toward policy accommodation. Yet beneath these headline gains lies a more nuanced story—one of broadening market participation, persistent valuation concerns, and an economy displaying both resilience and emerging strains.
Markets: Strength with Expanding Leadership
Global equities delivered impressive returns during the quarter. The performance was notable not just for its magnitude but for its breadth. While artificial intelligence and technology remained powerful drivers, market strength continued to expand beyond the mega-cap technology names that dominated 2024, with sectors such as financials, industrials, utilities, and communications services all gaining on the year. Volatility remained subdued throughout most of the quarter, with the VIX, a forward-looking gauge of market uncertainty, staying well below historical averages. Investors appeared to look past near-term uncertainties, focusing instead on solid corporate earnings and the prospect of more accommodative monetary policy.
Fixed income markets displayed resilience despite occasional volatility, supported by low default rates and investors’ continued search for yield in an environment where the Fed’s policy trajectory had become clearer.
The Federal Reserve: A Measured Pivot
In mid-September, the Fed delivered its first interest rate cut in nine months, reducing the federal funds target range by 25 basis points to 4.00%–4.25%. The move, while widely anticipated, marked a significant inflection point after the Fed’s extended pause following its December 2024 rate reduction.
Chair Jerome Powell characterized the decision as a “risk management cut,” acknowledging a notable shift in the balance of risks facing the economy. Job growth had slowed dramatically—August payrolls increased by just 22,000, while private-sector employment actually declined by 32,000 in September according to ADP data.[1] The unemployment rate edged up to 4.3%, its highest level since late 2021, reflecting not just slower hiring but an increase in workers actively seeking employment.[2]
Inflation, meanwhile, presented a more complicated picture. While the year-over-year Consumer Price Index reading of 2.9% in August remained above the Fed’s 2% target, officials expressed confidence that tariff-related price pressures would prove temporary.[3] The Fed’s updated projections signaled the likelihood of two additional rate cuts before year-end, with Powell emphasizing the committee’s commitment to supporting maximum employment as downside risks to the labor market have grown more apparent.
Economic Foundations: Solid but Softening
Despite labor market weakness, the U.S. economy demonstrated continued resilience during the quarter. Real GDP growth tracked toward 3% for Q3, supported by solid consumer spending and improving business confidence.[4] The passage of tax cut extensions and deferrals of certain tariff implementations helped ease near-term concerns that had weighed on sentiment earlier in the year.
However, several indicators warrant attention. The sharp deceleration in job creation—averaging just 27,000 monthly gains from May through August—suggests that the labor market is losing momentum. While layoffs remain relatively contained, hiring has slowed across most sectors.
Tariff effects have become increasingly visible in consumer prices, particularly for goods categories like apparel, household furnishings, and certain food items. The impact extends beyond headline inflation numbers, as businesses continue adjusting supply chains and passing through higher costs where possible. Most economists anticipate inflation will move higher before moderating, potentially reaching 3.5% to 4% by mid-2026 as delayed tariff effects fully materialize.
The continued weakness in the U.S. dollar—which fell approximately 11% in the first half of the year and extended losses during Q3—reflects mounting concerns about U.S. fiscal policy, trade tensions, and relative economic growth prospects. While dollar weakness creates headwinds for imported goods prices, it provides a meaningful boost to American exporters and enhances returns for U.S. investors holding international assets.
Strategic Considerations: Balancing Opportunity and Risk
As we enter the fourth quarter, we remain generally positive about markets while acknowledging that the risk-reward calculus has shifted. Several factors support continued optimism: the Federal Reserve’s more accommodative stance should provide underlying support for risk assets, corporate earnings have proven resilient with upward revisions concentrated in technology and financials, and the AI-driven capital expenditure cycle continues to create opportunities across multiple sectors.
However, caution is warranted given current valuation levels. The S&P 500 trades at approximately 22 times forward earnings—more than 30% above its 30-year historical average. Concentration risk remains near historic highs, with technology representing over 34% of the index and just five stocks accounting for more than half of the market’s 2025 gains. The Information Technology sector alone trades at a forward price-to-earnings ratio of roughly 37 times, well above its five-year average.[5]
This combination of stretched valuations and narrow market leadership leaves equities vulnerable to disappointment. Further upside will likely require either additional earnings growth beyond current projections or continued multiple expansion driven by enthusiasm for AI implementation, neither of which should be taken for granted.
We see more attractive risk-adjusted opportunities in areas that have lagged the headline indices. Small-cap equities, value-oriented stocks, and select sectors including healthcare, energy, and communication services trade at more reasonable valuations relative to their growth prospects. International developed markets continue to offer compelling opportunities, trading at significant discounts to U.S. peers while benefiting from improving economic conditions and the prospect of continued dollar weakness.
Within fixed income, the Fed’s easing cycle creates a favorable backdrop for high-quality bonds. Current yields remain attractive from a historical perspective, and if the economy continues to moderate as expected, bonds should provide both income and portfolio stability.
Looking Ahead: Navigating Uncertainty
Several factors will shape market dynamics in the coming months. The path of Federal Reserve policy remains dominant; any deviation from the market’s expectation of continued rate cuts could trigger volatility across asset classes. Ongoing tariff negotiations and trade policy developments will influence both corporate earnings and inflation expectations. The traditional fourth-quarter retail season will provide important signals about consumer health, particularly as income growth moderates and higher prices weigh on purchasing power.
The government shutdown that began on October 1st adds another layer of uncertainty, though markets have historically looked through such disruptions when they prove relatively brief. More concerning would be any indication that political dysfunction might prevent necessary fiscal actions or undermine confidence in U.S. economic management.
Throughout the quarter, we made strategic portfolio adjustments designed to reduce concentration risk while maintaining exposure to quality companies with strong fundamentals. We increased international equity allocations, added positions in sectors offering better valuations, and adjusted fixed-income positioning to take advantage of the Fed’s policy shift while managing duration risk appropriately.
Our Commitment
Market conditions today require balancing optimism about long-term opportunities with prudent risk management. We remain committed to identifying high-quality companies trading at reasonable valuations, maintaining appropriate diversification across sectors and geographies, and positioning portfolios to navigate both near-term volatility and capture long-term growth. The combination of Fed accommodation, solid corporate fundamentals, and expanding market breadth provides a constructive backdrop, even as we remain mindful of valuation constraints and potential economic headwinds.
Your trust and confidence continue to guide our work. Please reach out to your relationship manager if you have any questions, concerns, or would like to update us on your financial situation.
[1] ADP data, “ADP® National Employment Report—September 2025”
[2] BLS Employment data, “The Employment Situation—August 2025”
[3] BLS Inflation Data, “Consumer Price Index—August 2025”
[4] Federal Reserve Bank of Atlanta, GDPNow September 2025
[5] FactSet and Bloomberg Market Data
Recommended Reading: The Art of Spending Money by Morgan Housel
Morgan Housel, bestselling author of The Psychology of Money, returns with The Art of Spending Money—a refreshingly honest exploration of what so many financial books ignore: what to actually do with your wealth once you’ve built it.
Unlike many traditional finance guides focused solely on accumulation, Housel tackles the messy psychology behind our spending decisions—the envy, social signaling, and identity issues that drive us to buy things that don’t truly make us happy. His central insight? There’s no universal formula for spending well because what brings joy varies dramatically from person to person.
Housel argues that money works best as a tool to leverage who you already are, rather than defining you. The “happiest” people use money to gain independence, spend time with loved ones, and pursue what genuinely matters to them—whether that’s travel, experiences, or simply the freedom to control their schedule. His advice is both profound and practical: experiment to find “your thing,” stop chasing status, and remember that wealth is actually what you don’t spend.
Whether the reader is a young professional building their financial foundation, a retiree looking at their stored labor, or a parent seeking to model spending lessons for their children, this book offers essential wisdom on aligning spending with values rather than expectations. Please let us know if you would like us to send you a copy of The Art of Spending Money.
Dollars & Sense: Tactics for Building Wealth Before 50
Starting and progressing in your career comes with exciting opportunities—and critical financial decisions that will shape your future. In a recent Dollars & Sense post, our financial planning-focused blog series, Wealth Advisor Kimbo Brown-Schirato, WMCP, revealed the essential wealth-building strategies young and mid-career professionals should focus on at each stage.
Before refining the tactics around investment accounts or creating budgets, ask yourself: What is YOUR definition of wealth? Research shows that 72% of people with clear financial targets achieved or exceeded them within a decade, compared to just 34% without defined goals. Financial success isn’t about hitting arbitrary numbers—it’s about funding a life aligned with your values and career aspirations.
Brown-Schirato explores decade-by-decade financial power moves for young professionals:
Your 20s: Build your foundation by establishing strong savings habits, creating an emergency fund, and harnessing the extraordinary power of compound interest. Even small, consistent investments now can outpace much larger contributions made later—one example shows an early starter accumulating $150,000 MORE than a late starter despite investing one-third the amount.
Your 30s: Elevate your strategy by maximizing retirement contributions, eliminating high-interest debt, and avoiding lifestyle inflation as your income grows. This decade sets the stage for long-term wealth acceleration.
Your 40s: Accelerate wealth accumulation during your peak earning years through optimized saving rates and strategic tax planning—decisions made now have 3.5 times more impact on retirement outcomes than those made in your 60s.
Visit our website to read the full blog post and explore additional resources on personal financial planning for young professionals. Discover how Obermeyer Wealth can help you build the financial foundation for lasting success.
Firm Updates
NEW TEAM MEMBERS
We are delighted to welcome two new employees to our growing team.
Caroline Duke, Wealth Advisor: Caroline has more than a decade of experience in financial services, with expertise in turnaround and restructuring advisory, banking, and wealth management. She previously held positions at Berkeley Research Group, Capital One, and Merrill Lynch, where she developed a strong foundation in strategic consulting and client relationship management. Caroline earned her B.A. from the University of Notre Dame, where she double majored in Management Consulting and History.
Jeff Susman, Senior Strategist: Jeff is responsible for advising our team on the design and implementation of corporate and investment strategy. He previously served as an Executive Director and Team Lead for JP Morgan Private Bank in Denver, where he led a high-performing wealth management team dedicated to serving the intricate financial needs of affluent individuals and families across the United States. Jeff earned his MBA from the Ross School of Business at the University of Michigan and his BA from Tufts University, where he double majored in Economics and International Relations. A Denver native, he also serves as Trustee/Treasurer for Graland Country Day School and is a Board Member at the Clyfford Still Museum.
OBERMEYER SERVING OUR COMMUNITY
We are pleased to announce that Bret Hirsh, Obermeyer Wealth Vice President and Partner, has been appointed to the Advisory Board of Directors of CollegeInvest. Widely known as Colorado’s 529 college savings program, CollegeInvest is a not-for-profit division within the state Department of Higher Education that aims to encourage all Colorado families to plan, save, and pay for higher education regardless of income or risk tolerance. Its 529 plans offer estate-planning and tax advantages, simplify saving for college, and help Colorado families make college possible.
Bret was appointed by Governor Jared Polis and confirmed by the State Senate. Collegelnvest is self-supporting and does not receive taxpayer funding.
AWARDS
2025 Barron’s Top Women and Top 100 Independent Advisors
Ali Phillips, President of Obermeyer Wealth Partners, was named to the 2025 Barron’s Top 100 Women Financial Advisors and Top 100 Independent Advisors this year. Representing our firm, Phillips is notably the only advisor from an independent wealth management firm in Colorado to appear on Barron’s list of Top 100 Independent Advisors. These rankings are considered rigorous industry benchmarks intended to help investors identify sophisticated financial professionals that suit their specific needs.
Best-In-State 2025: Forbes/SHOOK Top Next-Gen Wealth Advisors
Obermeyer Wealth Vice Presidents Brooke Gais and Brian Brady claimed the No. 2 and 3 spots in Colorado, respectively, on the annual Best-in-State ranking. The next generation of wealth management – advisors under age 40 – is poised to take the reins from the cohort of advisors approaching retirement age within the next decade. Nearly 60% of new Certified Financial Planners in 2024 were under age 35, according to Forbes, and record gains in gender and ethnic diversity were also noted. Gais was also recognized on the national ranking, coming in at number 65.
“These awards speak to our entire team’s commitment to delivering exceptional wealth management services to our clients across Colorado and beyond,” Phillips said. “Our client-first, team-based approach drives everything we do at Obermeyer Wealth Partners. We’re grateful to our clients for trusting us to provide the financial planning and investment guidance that helps them achieve their most important financial goals.”
Visit Barron’s and Forbes’ websites to view the complete rankings and our website for important information on ranking methodology.
PROMOTIONS
Adam Savin, Senior Vice President, Executive Committee Adam joins the Executive Committee, reflecting his leadership of our investment team and in expanding client solutions. He communicates complex strategies clearly and thinks strategically about client needs.
Jody Dible, Director, Technology Jody’s promotion recognizes her technical expertise and process improvements, including her leadership with several crucial internal initiatives and consistent display of our firm’s core values.
Sean McGechie, Senior Associate, Corporate Concierge Sean’s promotion reflects his exceptional client service and attention to detail. He creates welcoming experiences for clients in our offices and at our events, and is dedicated to elevating Obermeyer’s commitment to excellence
