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The S&P 500 blasted into the final quarter of 2025 with a nearly spotless record, rising 14% through the end of September and hitting a fresh all-time intraday high by Friday, the third trading day of Q4.
That kind of start is statistically close to flawless. Now Bank of America says that every time in history the S&P 500 surged at least 10% by September’s end, it kept rising for the rest of the year.
Well except in 2012 when the U.S. got slammed by a fiscal cliff and global growth slowed. That year, the index gave back 1% in Q4 after gaining 15% in the first nine months.
So far, 2025 doesn’t look anything like 2012. There’s no fiscal cliff, and overseas markets are not in freefall. What there is, however, is momentum.
The S&P 500 is actually coming off back-to-back 20%+ gains in both 2023 and 2024. And as of Friday, the benchmark index closed at 6,715.79, barely higher on the day but enough to etch another record into its YTD climb.
Analysts project 7,000 by December, ignore shutdown
Tom Lee, head of research at Fundstrat Global Advisors, doesn’t see the rally stalling out anytime soon. He told clients this week he expects the S&P 500 to reach 7,000 by December, which would be at least 4% higher than Thursday’s closing level.
Tom said the U.S. government shutdown, which stretched into its third day on Friday, wasn’t a concern for markets: “It’s had little impact on stocks in the past,” he wrote. Tom called the postponed release of the September nonfarm payrolls report a “sidebar issue.”
That report was scheduled for Friday but got delayed because of the funding lapse. Investors instead focused on other signals, including a report from the Institute for Supply Management, which showed the services employment index shrank for the fourth straight month.
That slowdown gave traders more confidence that rate cuts from the Federal Reserve are still on the table.
Even though the shutdown didn’t move the S&P 500 much this week, Tom did caution that a longer lapse in federal funding could eventually weigh on stocks. He also warned that a spike in investor excitement might become a problem.
If too many people pile into stocks at once, he said, there could be no one left to buy and push prices higher later. That could freeze the rally right when people think it’s unstoppable.
Dow and S&P 500 close at record highs, Nasdaq slips
While the S&P 500 barely moved Friday, it still finished with a new all-time high. The Dow Jones Industrial Average climbed 238.56 points, or 0.51%, to end at 46,758.28, also hitting a new closing high. The Nasdaq Composite wasn’t as lucky. It dropped 63.54 points, or 0.28%, closing at 22,780.51.
Beneath the surface, there were some sharp moves. Applied Materials slumped by 2.7% after the chip-equipment maker said Thursday night that it expects a $600 million hit to its 2026 revenue. The tech sector took a hit overall, dragging on the Nasdaq’s performance.
Tesla stock fell by 1.4%, showing weakness in big-name growth stocks. But utilities stocks ran in the opposite direction, up by 1.2% on the day, leading the sector gains inside the S&P 500.
Despite the noise, the full week looked strong across the board. The Dow added 1.1%, matching the S&P 500’s 1.1% gain, while the Nasdaq closed out the week with a 1.3% rise.
That capped off a bullish start to Q4, with the S&P 500 still grinding higher and holding its most perfect track record.
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