Equity Indices Advance in the 3rd Quarter – Domestic Equity Overview

Stocks extended their rally as investors bet that recent and anticipated Federal Reserve rate cuts would sustain momentum across the broader market. Gains that began in large-cap shares spread to mid- and small-cap stocks, signaling renewed risk appetite. Markets largely looked past the government shutdown that began October 1, which temporarily disrupted the flow of federal economic data. By the end of the third quarter on September 30, all major indexes had advanced to new highs: in Q3 the S&P 500 rose 8.1%, the Dow Jones Industrial Average gained 5.7%, the Nasdaq Composite climbed 11.4%, and the small-cap Russell 2000 jumped 12.4%.

Interest rates remain the dominant variable shaping equity valuations, as higher borrowing costs weigh on profit margins and investment plans. Investors are watching the upcoming earnings season for early evidence of how tariffs and a cooling labor market are filtering through corporate results—and whether the Fed’s policy pivot will be enough to keep the economy on solid footing. (Sources: S&P, Dow Jones, Nasdaq, Federal Reserve, Russell)

Corporate Bonds Gain Favor as Treasury Demand Shifts – Fixed Income Update

The premium investors demand to hold investment-grade corporate bonds instead of Treasurys narrowed to its lowest level since 1998, underscoring strong confidence in corporate balance sheets. Demand for high-quality U.S. corporate debt strengthened in September, as large-cap companies with solid finances were able to issue bonds at elevated prices. Fixed-income strategists increasingly expect appetite for corporate bonds to outpace demand for Treasurys, as fiscal constraints and rising deficits weigh on government borrowing capacity.

The 10-year Treasury yield ended the quarter at 4.16%, retreating from recent highs. Markets are betting that the Federal Reserve will move to cut rates in the coming months, placing greater weight on weakening private-sector labor data than on delayed official reports from the Department of Labor. (Sources: Treasury Department, Labor Department)

Foreigners Own Record Amount of U.S. Stocks – Equity Market Dynamics

Foreign purchases of U.S. equities climbed to a record high in the second quarter of 2025, according to Federal Reserve data, with overseas investors now holding roughly $18 trillion in U.S. stocks—about 30% of the $60 trillion U.S. equity market. That share marks the largest foreign ownership level on record, dating back to 1945.

Analysts say international investors are increasingly steering away from U.S. Treasurys in favor of corporate bonds and large-cap equities, drawn by higher yields and stronger earnings potential. The surge in foreign holdings also reflects broad gains in equity valuations across sectors. For many global investors, the transparency, accounting rigor, and liquidity of U.S. markets remain enduring attractions in an otherwise uncertain global landscape. (Source: Federal Reserve Bank of St. Louis)

Protecting Yourself from Identity Theft – Personal Finance

The Department of Justice estimates that roughly 24 million Americans will fall victim to identity theft in 2025, as scams grow increasingly sophisticated through the use of artificial intelligence and advanced social engineering tactics. Criminals are blending new technologies with traditional fraud methods to deceive victims into disclosing sensitive personal and financial information.

Trending Identity-Theft Scams:

• AI-Powered Scams: Fraudsters are using generative AI to craft convincing phishing emails, text messages, and even deepfake audio and video impersonations of legitimate individuals or institutions.

• Imposter Scams: Criminals pose as government officials, company representatives, or relatives to extract payments or data, often leveraging AI-generated voices or fabricated documents.

• Telemarketing and Tech-Support Scams: Callers impersonate service agents or technical support staff, pressuring victims to share passwords or grant access to financial accounts.

• Data-Breach Fallout Scams: After corporate breaches, scammers send deceptive messages citing the incident and directing victims to fake verification links.

• Card Skimming: Hidden devices on ATMs, registers, and other point-of-sale terminals capture credit and debit card data during lawful transactions.

• Medical Identity Theft: Stolen identities are used to obtain medical treatment or prescriptions under false pretenses.

• Google Voice Authentication Scams: Fraudsters pose as online buyers, tricking sellers into revealing verification codes that enable hijacking of their phone numbers for further scams.

(Source: U.S. Department of Justice; September 2025, NCJ 248991)

Consumers Falling Behind on Loan Payments – Consumer Finances

Signs of financial strain among U.S. consumers are emerging across key sectors, raising concerns about how long household spending can hold up. Rising delinquencies on auto loans and credit cards are revealing growing pressure on borrowers. Elevated interest rates and surging vehicle prices have saddled consumers with historically high monthly payments—averaging $749 for new cars and $529 for used ones, according to Federal Reserve data.

As credit card balances climb, more borrowers are falling behind on payments. Credit access has widened in recent years as nontraditional finance companies and private lenders expand into markets long dominated by banks. The result is a gradual shift in delinquency and default risk away from traditional banks and toward these newer, less regulated lenders—a trend analysts say could reshape the credit landscape if economic conditions continue to deteriorate. (Source: Federal Reserve Bank of St. Louis)