Both the S&P 500 ETF (SPY) and the Nasdaq 100 ETF (QQQ) closed in negative territory on Wednesday for a second consecutive trading session.
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The total market capitalization-to-GDP ratio, often referred to as the “Buffett Indicator,” is at a record high of 216.8%, according to LongTermTrends. The indicator divides the total market cap of all U.S. stocks by its gross domestic product (GDP) and is a measure of U.S. equity valuation. When including private companies, the indicator is also at a record high of 328.7%.
Despite valuation concerns and recent stock market weakness, the remainder of 2025 could see further gains. When the S&P 500 (SPX) secures at least one all-time high in September, it trades higher 63.6% of the time in October with an average return of 0.8%, according to data compiled by Carson Group. In the same scenario, the fourth quarter has traded higher 90.9% of the time with an average return of 4.7%. The benchmark index has made 28 record highs in 2025, with eight of those occurring in September.
Bank of America has also suggested that the fourth quarter could boom, calling it the “most wonderful time of the year.” The bank notes that the S&P 500 rises during the quarter 74% of the time with an average gain of 2.84%. Technology is the highest-returning sector during the period, rising 80% of the time with an average gain of 6.64%.
Investors should also keep an eye out for the “Santa Rally,” a period spanning the last five trading days of December and the first two trading days of January. The seven-day stretch has closed higher 79% of the time with an average return of 1.3%, according to Investopedia.
Meanwhile, the Fed remains divided on the future path of interest rates. Although the central bank voted 11-1 to reduce rates by 25 bps last week, some officials have advocated for further cuts to spur growth and employment, while others have argued that higher rates are needed to keep inflation in check.
On Wednesday, Chicago Fed President Austin Goolsbee cautioned against aggressive rate cuts, warning that inflation could be stickier than expected. “I’m uncomfortable with overly frontloading a lot of rate cuts on the presumption that [inflation] will probably just be transitory and go away,” Goolsbee told the Financial Times.
The S&P 500 (SPX) closed with a 0.30% loss, while the Nasdaq 100 (NDX) fell by 0.32%.
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