Market Perspectives Q4 2025

Market Update

After coming under pressure earlier in the year, stocks have since rebounded as trade policy uncertainty has largely eased. Investor sentiment has been helped by better-than-expected economic growth, the Federal Reserve’s (Fed) renewed rate-cutting cycle, and positive company earnings and share buyback announcements. On the other hand, concerns around stock market concentration and stretched valuations, and a more cautious outlook for additional Fed rate cuts, have contributed to recent bumpiness—reinforcing the importance of broad portfolio diversification.

The Economy

While the full impact of tariffs and trade policy remains uncertain, underlying economic growth has been more resilient than anticipated. Despite some moderation in the labor market, economic data surprises, in aggregate, have trended positive through the second half of the year. Forecasts for 2025 GDP growth have been revised higher, with the economy now expected to expand 1.8%. Inflation, however, is projected to remain above the Fed’s long-term 2% target through at least 2027. Given this backdrop, we anticipate the Fed will be cautious in its approach to monetary policy, aiming to balance cutting interest rates it still views as restrictive without reigniting inflationary pressures.

Asset Class Outlook

Looking ahead, and given the current economic backdrop, the environment remains constructive for both stocks and bonds, though we are mindful of stretched valuations and concentration risks. International stocks continue to trade at a discount to U.S. markets and may continue to be supported by fiscal and monetary policies and positive intra-region trade dynamics. Bond yields remain relatively attractive across many high-quality sectors, and several of our preferred bond strategies currently offer mid- to high-single-digit yields. We also see compelling opportunities in select alternative strategies that may enhance risk-adjusted returns and diversify exposure beyond public markets.

For a deeper review of current opportunities, risks, and the themes guiding our portfolio positioning, please see our full Q4 Market Perspectives presentation.

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Mission Wealth is a Registered Investment Advisor. This commentary reflects the personal opinions, viewpoints, and analyses of the Mission Wealth employees providing such comments. It should not be regarded as a description of advisory services provided by Mission Wealth or performance returns of any Mission Wealth client. The views reflected in the commentary are subject to change at any time without notice. Nothing in this commentary constitutes investment advice, performance data, or any recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Mission Wealth manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.