U.S. Stocks Rally, Capping Best Three-Month Stretch Since 2020

Stocks just finished their best three-month stretch in six years. Yet the rally came with plenty of fear - war in Iran, oil price swings, and a Federal Reserve that may keep raising rates. The market kept climbing anyway.

The S&P 500 gained 0.8% on the last trading day of the quarter, pushing its three-month total value increase to roughly $8 trillion. The Nasdaq 100 did even better, rising 1.7% thanks to a bounce in chipmaker stocks. The Dow Jones Industrial Average rose a more modest 0.3%.

"The markets have proven to be the ultimate grinder as they keep crushing it despite a lot of hand-wringing that has gone along with this incredible rally that has endured deep selloffs, the Iran war and a number of other outside influences," said JJ Kinahan at Cboe Global Markets.

Get your free investing masterclass bonus when you join Market Briefs, our free daily newsletter

Economic data released late in the quarter showed strength in the job market and consumer sentiment. That gave investors confidence that corporate earnings would hold up even as the Fed stayed hawkish. The yield on 10-year U.S. Treasury notes rose seven basis points to 4.45%.

"Despite some twists and turns, the path of least resistance for stocks broadly remained up and to the right for much of the last three months," said Jeff Buchbinder at LPL Financial. "Strong fundamentals and powerful structural themes such as AI can justify elevated valuations for a while, but they do not eliminate the typical ups and downs. "Rather than signaling the end of the bull market, current conditions appear more consistent with a mature bull market that may be due for a pause. We remain constructive on equities"."

Mona Mahajan at Edward Jones said, "a rotation into cyclical corners could have legs especially if oil prices keep heading toward levels prior to the war and the economy remains resilient."

Other markets moved in different directions. West Texas Intermediate crude fell 0.9% to $70.09 a barrel. Bitcoin dropped 2.5% to $58,700.13. The Japanese yen weakened 0.4% against the U.S. dollar, hitting 162.59 yen per dollar.

Anthropic PBC introduced new tools designed to let scientists automate their research. The Supreme Court will consider Apple Inc.'s challenge to a contempt order tied to its longstanding antitrust dispute with Epic Games, the developer of Fortnite. A consortium including Visa, Stripe, and Bank of New York Mellon is teaming up to launch a stablecoin.

Philip Morris International Inc. received FDA authorization to sell its Zyn nicotine pouches with a claim of being a reduced-risk alternative to cigarettes. Air Products and Chemicals Inc. has canceled its multibillion-dollar Louisiana project that was set to produce hydrogen and capture carbon dioxide.

Bob Michele at JPMorgan Asset Management sees the Fed doing "maintenance hikes" next year.

Subscribe to Market Briefs, our free daily newsletter, and claim your bonus investing masterclass