If you’ve been watching markets this year, you know 2025 hasn’t followed anyone’s predictions. Policy changes have come fast. Global trade relationships have been rewritten. Given these unexpected shifts, markets have shown surprising resilience and adaptability.
If you’ve been following markets this year, you know 2025 hasn’t gone by anyone’s playbook. Policy shifts, evolving trade dynamics, and a changing rate environment have made adaptability essential—for markets and investors alike.
Our latest quarterly review looks back at the key developments from Q3 and how we’re positioning portfolios for what’s next.
Watch the video below for a full discussion of the data, our outlook, and the changes we’ve made to align with these trends.
Market Overview
Q3 2025 market review:
- Strong rebound from April with broadening recovery
- International markets outperforming U.S. for first time in 15+ years
Q4 market outlook:
- Inflation persisting from tariff policies
- Fed cutting short-term rates while long-term rates stay elevated
- International opportunities emerging as U.S. valuations stretch
Q3 2025 Market Review
The third quarter brought welcome news after spring’s volatility. After the Liberation meltdown in April, markets rebounded and broadened to include sectors and regions that had lagged earlier in the year.
For the first time in over fifteen years, stocks outside the U.S. are positioned to outperform domestic equities. This performance gap reflects the structural changes and appears to be a lasting shift in international market leadership.
Key Takeaways from Q3
- Market strength extended beyond a few dominant tech names.
- International equities led performance across major developed and emerging markets.
- Market breadth improved meaningfully from earlier in the year.
These trends carry important implications for portfolio positioning as we head into 2026.
Inflation and Growth Challenges
Tariff policies are showing up in the economic data. Not every product category is affected equally, but producer costs have risen and consumer prices remain under upward pressure.
The OECD and other forecasters expect these tariff impacts to intensify next year. Economic growth projections for the U.S. have been revised down to a range of 1% to 1.8% over the next few years. Slower growth combined with persistent inflation creates a challenging environment for traditional investment strategies.
How We’re Adjusting Portfolios
Fixed income positioning: Moving beyond standard Treasuries into sectors that offer better inflation protection and return potential.
Hedging strategies: Maintaining exposure to market upside while cushioning against volatility.
Inflation-sensitive assets: Increasing exposure to investments that historically perform well when prices rise.
Traditional bonds struggle in the current environment. As the current outlook develops, the adjustments we’ve made over recent quarters are proving timely.
Interest Rate Outlook
In September, the Federal Reserve began cutting rates and indicated more easing to come. The focus has clearly turned toward employment, which means short-term rates will likely continue falling through 2026—potentially near 3% by the end of next year.
However, longer-term rates and treasury supply pressures are keeping intermediate and long-term rates elevated despite Fed cuts. That creates a split-rate environment requiring careful strategy.
What This Means Practically
- Savings accounts and CDs will offer lower yields over time
- Mortgage rates and credit card interest won’t drop as sharply
- Longer-term bonds continue generating attractive income for patient investors
U.S. Stock Market
Valuations in parts of the U.S. market have gotten stretched. The artificial intelligence boom has pushed a handful of mega-cap tech stocks to historically high multiples. Market concentration in these few names is extreme by almost any measure.
That said, expensive doesn’t mean the entire market is overvalued. Opportunities still exist for investors willing to look beyond the headline indices.
Our Quality Income Approach
We’ve developed a strategy that addresses current valuation concerns:
- Focus on companies with investment-grade credit ratings
- Emphasize consistent dividend payers trading at reasonable valuations
- Limit concentration in expensive mega-cap names without excluding market leaders
- Target businesses positioned to perform well as growth slows
When economic growth decelerates but recession remains unlikely (our base case for the next 12 months), stable cash-generating companies with strong balance sheets tend to outperform. This quality income strategy positions portfolios for that environment.
International Markets
Our Q4 market outlook identifies international equities as one of the most compelling opportunities heading into 2026. Multiple factors support this view.
Why International Stocks Look Attractive
Valuation gap: U.S. stocks trade at significant premiums to international markets, both historically and on a sector-by-sector basis.
Tariff impact: Policy impacts are likely to weigh more on U.S. margins than international ones.
Currency dynamics: The U.S. dollar appears vulnerable given fiscal policy concerns, which would benefit international stock returns for dollar-based investors.
Trade realignment: Global supply chains and commerce flows continue to diversify, favoring broader international exposure.
After 15 years of U.S. market dominance, we believe the cycle is turning. We’ve increased allocations to both international equities and international fixed income.
Watch the Full Q4 Market Outlook
Markets have once again shown resilience, adapting faster than many expected. This adaptability has created meaningful opportunities for investors willing to stay nimble and intentional.
Watch the full video to hear from Matthew Neyland on how SK Wealth is navigating these changes and where we’re seeing opportunity next.
At SK Wealth, our financial advisors have been helping clients navigate complex market environments for 25 years. Through our Integrated Financial Advantage™ process, we build portfolios adapted to current conditions while staying focused on your long-term financial goals. We understand that successful investing requires both strategic discipline and tactical flexibility, particularly when markets are moving as quickly as they are right now.
Important Disclosure Information
Please remember that past performance is no guarantee of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by SK Wealth Management, LLC [“SK Wealth”]), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, no portion of this discussion or information serves as the receipt of, or a substitute for, personalized investment advice from SK Wealth. contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from SK Wealth. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Neither SK Wealth’s investment adviser registration status, nor any amount of prior experience or success, should be construed that a certain level of results or satisfaction will be achieved if SK Wealth is engaged, or continues to be engaged, to provide investment advisory services. SK Wealth is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the SK Wealth’s current written disclosure Brochure and Form CRS discussing our advisory services and fees is available for review upon request or at https://skwealth.com/. Please Note: SK Wealth does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to SK Wealth’s web site or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. Please Remember: If you are a SK Wealth client, please contact SK Wealth, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. Unless, and until, you notify us, in writing, to the contrary, we shall continue to provide services as we do currently. Please Also Remember to advise us if you have not been receiving account statements (at least quarterly) from the account custodian.
