Third Quarter Review and Outlook

What Just Happened? The U.S. equity market (S&P 500®) rose by 5.9% in the third quarter, its third back-to-back quarterly win this year. Stocks also defied warnings of a rocky September by gaining 2.1% in the month. More important than the collective win/loss record of the market is the recent shift in stock market leadership away from a handful of mega-cap technology shares (the “Magnificent Seven” or “Mag 7” stocks like Amazon and Microsoft, for example) to a broader, more inclusive cohort. An equal weighted S&P 500® index – a stock index in which each member has the same weight at the start of the period – rose by 9.6% in the third quarter, outpacing the “tech-heavy” NASDAQ index, which rose by just 2.8% in the period. This was only the first time in the last eight quarters that a proxy for the entire stock market outpaced the more narrowly focused NASDAQ index.

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