Summary
Even with some late-September profit taking, growth sectors clearly won the third quarter. But other parts of the market also participated in the uncommonly strong summer stock-market rally. The best sector in 3Q25 was Information Technology, up 11.7%. Consumer Discretionary bounced back in 3Q25, rising just under 9% in the quarter; given early-year weakness, Discretionary is up about 5% year to date. Communication Service rose 7.8% in 3Q25. Every sector but one (Consumer Staples) was positive in 3Q25. Still, only the three growth-sector leaders did better than the S&P 500, which was up 6.4% for the 2025 third quarter. Energy rose in low-double-digits in 3Q25, despite delivering the worst performance of any sector in calendar 2Q25 earnings season. Other sectors lagging the broad market but outperforming peers included Materials and Financial, both up about 4% in the quarter. They are trailed by (in descending order) Utilities, Healthcare, Industrial, and Real Estate. On a granular basis, the AI trade continues to drive overall stock-market returns. The 13% gain in the S&P 500 year to date is somewhat misleading or at least imbalanced, as the top
