Paul Hickey on Q3 Market Performance, Gold Strength, and Q4 Outlook

Q3 Market Performance and Gold Strength

• 📈 The Nasdaq led major averages in Q3, finishing up over 10% since July, with the S&P up more than 7% and the Dow up 5%.
• 🥇 The strength in gold is attributed to a reflection of weak currencies overall, particularly the weak dollar, which was one of its weakest quarters since 1973.
• 🌏 Investors are moving towards hard assets like gold, partly due to a significant valuation gap between different markets, making some assets out of favor.

Q4 Outlook and Market Sustainability

• ⚠️ A more conservative stance is advised for the end of Q3 and early Q4 due to the unsustainable pace of buying seen recently, similar to the selling during the 'tariff tantrum'.
• ⏸️ A pause or healthy pullback is expected before earnings season, which can set the stage for a positive rally into year-end.
• 📊 Historically, years with strong performance in the first three quarters, like 2023, tend to see even stronger and less volatile fourth quarters.

Sector Performance and Economic Indicators

• 🚀 Technology and cyclicals are leading sector performance, while defensives are underperforming, indicating a better economic outlook.
• 📊 Economic data over the last month has been coming in above expectations, contradicting concerns about a weakening economy.
• 📈 The performance of semiconductors, viewed as a key economic barometer, has improved significantly since bottoming in April, signaling positive economic health.

Labor Market and Economic Slowdown

• 📉 While there is a slowdown in the labor market, it is not the cataclysmic event some predict, with jobless claims showing recent strength.
• ⚠️ A significant disparity in market breadth (where fewer stocks are driving gains) has been observed, which warrants caution if it persists into 2026.