September has historically been the weakest month for stocks, but not in 2025. In fact, the entire third quarter has been a treat for investors, with U.S. equities marching to new highs and bouncing back from April’s tariff tiff.
Most of that optimism came as Q2 earnings surprised to the upside, the AI-fueled trade continued to gain momentum, and investors piled on the bets that the Federal Reserve would cut rates.
Compounding existing excitement, earnings growth is expected to continue, AI optimism continues with no clear ceiling, and investors finally have the cut they were looking for.
That’s not to say that there aren’t concerns. Equities are now considered “expensive” across a number of measures, the economy seems to be teetering, and a government shutdown could delay the release of critical economic data at a time where the Fed desperately desires those insights.
But just for a moment, bulls can relish in the complete recover of equities from their April lows. In the third quarter, here’s how various equity indexes performed from the close on Jun. 30 to the end of trading on Sept. 30:
Russell 2000: 2,175.04 → 2,436.48 (+12.02%)
Nasdaq Composite: 20,369.73 → 22,660.01 (+11.24%)
S&P 500: 6,204.95 → 6,688.46 (+7.79%)
Dow Jones: 44,094.77 → 46,397.89 (+5.22%)
All four equity benchmarks notched new record highs, including the Russell 2000, which emerged from a years-long rut by setting its first record high since Nov. 2021 on rate cut optimism. It was the best-performing of the major benchmarks.
However, there were still envious performances for the large cap-focused S&P 500 and Nasdaq Composite, which had their best third quarter since 2020 and best September since 2010.
And even the 30-strong Dow Jones Industrial Average, the worst performing among major U.S. equity benchmarks, finished the quarter at a record high. It was its 8th of the year, with all of them coming since Aug. 22.
Taken together, the gains in the index now represent the majority of their year-to-date gains. Finishing off their last trading day of the third quarter, the Nasdaq, S&P 500, Russell 2000, and Dow are now up 17.34%, 13.72%, 9.37%, and 9.06% since the start of the year, respectively.
It remains to be seen how September’s unseasonable strength will affect the fourth quarter, which tends to be quite strong for U.S. equities. Per research from LPL Financial, the S&P 500 has averaged a 4.2% gain from October through December. So if the past is any indication, investors might be in for even more higher highs in the quarter ahead.
