A stronger than expected U.S. growth print reset investor assumptions around momentum, policy, and asset allocation, lifting equities to fresh highs while reinforcing a selective risk on tone across global markets. Third quarter expanded at a 4.3% annualized pace through September, materially above the 3.2% consensus and the fastest rate in 2 years. The composition mattered as much as the headline, with consumer spending accelerating and easing concerns that a cooling labor market would translate into an abrupt pullback in household demand. That reassurance initially created hesitation as markets weighed the implications for interest rates, but the session ultimately resolved higher as investors judged that growth resilience still outweighed policy risks.
U.S. equities reflected that recalibration. The S&P 500 rose 0.5% to a new record, its first since 12 December, while the gained 0.2% and the advanced 0.6%. The market response underscored a belief that the economy remains in a narrow window where growth is firm enough to support earnings without immediately forcing a restrictive policy response. Longer dated Treasury yields were little changed, signaling that bond markets are not yet challenging the idea that inflation is decelerating even as activity accelerates. Expectations for multiple in 2026 remain embedded, alongside confidence that the Federal Reserve will avoid overtightening into a still expanding economy.
At the same time, the data revived a parallel debate around policy credibility and the dollar. Strong growth paired with easing inflation has historically supported equities, but concerns that aggressive easing could eventually push long term yields higher and undermine the currency have driven defensive hedging. Gold extended its rally above $4,500 per troy ounce before closing just below that level at another record, leaving prices up more than 70% in 2025. The move reflects not near term inflation fear but longer-horizon skepticism about monetary discipline if growth remains strong enough to justify looser financial conditions.
Equity leadership remained concentrated in growth and innovation. Communication services and information technology outperformed, with rising 3% and gaining 2.3% as investors continued to reward companies most leveraged to sustained capital spending tied to artificial intelligence infrastructure. In healthcare, U.S. listed shares jumped 7.3% after regulators cleared the company to begin selling an oral version of its Wegovy obesity treatment in January, reinforcing expectations of broader market penetration beyond injectable therapies. moved in the opposite direction, falling 7.5% after a sharp December rally of more than 30%, a reminder that momentum-driven gains remain vulnerable to profit-taking.
The growth signal also echoed overseas. European equities tracked the positive tone, with the Stoxx Europe 600 reaching a record, while energy markets extended their recovery. Brent crude settled at $62.38 per barrel, its fifth consecutive daily advance from recent lows, supported by firmer demand assumptions tied to global growth rather than supply constraints.
Looking ahead, investors will focus on whether incoming inflation data and labor market indicators confirm that the economy can sustain above trend growth without reigniting price pressures. The base case remains a continuation of solid consumption and gradual disinflation that supports equities and selective risk-taking. The key risk is that persistent strength forces a reassessment of rate cut expectations, pushing real yields higher and testing the durability of equity valuations, particularly in the most crowded growth segments.