Bank of America analysts said in a Wednesday note that investors should stay optimistic heading into the final quarter of 2025.
According to the bank, Q4 is historically the strongest period for stocks, with all ten major equity indices delivering positive average returns.
BofA highlighted that the S&P 500 averages a 2.84% gain in the fourth quarter, rising 74% of the time. The Nasdaq 100 posts an average increase of 6.16%, with gains recorded 69% of the time. The Russell 2000 typically rises 4.58%, advancing 76% of the time. The bank added, “October tends to be flat, November better, and December especially favorable.”
Sector performance also shows clear patterns. Technology leads Q4, climbing 6.64% on average and rising 80% of the time. Other sectors that often outperform include consumer discretionary, financials, industrials, and materials. By contrast, energy and real estate usually lag, averaging less than 2.5% returns and only rising 63–65% of the time.
BofA also pointed to the well-known Santa rally, which often drives indices higher in December, especially in weeks 11–12. The bank added that an “up January in Year 1 of the U.S. presidential cycle supports strong Q4 outcomes,” with the S&P 500 gaining 1.71% on average 86% of the time.
Beyond equities, seasonal patterns appear across bonds and commodities. Yields often rise in early October before falling into year-end. Commodities typically show energy weakness offset by metals strength. Oil prices tend to decline in October and November, while gold and silver usually rally in late December.
