The SPDR S&P 500 ETF Trust (NYSE:SPY), which tracks the S&P 500, made several new all-time highs in the month of September and during the first three quarters of 2025.
Freedom Capital Markets Chief Market Strategist Jay Woods tells Benzinga there could be more highs on the way in the fourth quarter. Here’s a look at Woods’ thoughts on the S&P 500, rate cuts, tariffs and more, as the fourth quarter kicks off.
Market Shrugs Off Headlines
With headlines around tariffs, unemployment and international relations, Woods said the surge in market indexes shows that investors are less concerned now than earlier this year.
“The bottom line is the market has been shrugging off headlines,” Woods told Benzinga.
Woods said the market rally is “head scratching” given the concerns investors had in April after Liberation Day.
“The president has been known to give us volatile headlines.”
The market expert said that even recent headlines about Russia and Ukraine, as well as Federal Reserve Chairman Jerome Powell’s statement that the market is “fairly highly valued,” couldn’t spook the markets.
This year reminds Woods of 2017, the first year of Donald Trump‘s first presidential term, when there were 12 months of volatile headlines and the markets were up every single month of the year.
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Big Tech To Shine In Q4
With the strong market returns in the first three quarters, Woods said some investors who have been on the sidelines due to headline risk may now “have to chase performance.”
“This market is poised to continue to grow,” Woods told Benzinga.
While some themes like quantum and nuclear could continue to be hot, Woods prefers to stay patient and “stick with what’s working.”
Woods said the Magnificent 7 and big technology stocks will likely be strong performers in the fourth quarter, as they are poised technically and fundamentally to rally.
NVIDIA Corporation (NASDAQ:NVDA) goes into the fourth quarter near all-time highs and could benefit from continued AI spending.
“The constant theme of capex spend” makes companies like Nvidia the biggest beneficiaries, Woods added.
“Nvidia poised to go higher.”
Woods said the world’s most valuable company is undervalued from a price-to-earnings perspective and shares could hit $200 by the end of the year.
Woods said Amazon.com Inc (NASDAQ:AMZN) is up marginally in 2025 and trying to break out. Apple Inc (NASDAQ:AAPL) is another stock that is finally up for the year and could see a breakout in the fourth quarter.
“Could go on a little bit of a run,” Woods said of Apple.
Woods also highlighted Broadcom Inc (NASDAQ:AVGO), which is not a Magnificent Seven stock, but has been helping to lead the market higher.
“The AI spend still there.”
When including Broadcom with the Mag 7, the eight stocks make up around 38% of the S&P 500, which is a historical high.
“When the market goes up, it’s gonna be on the shoulder of these giants.”
Woods said now is not the time to pull back from the technology giants when looking for the next big investments for the fourth quarter.
When asked whether the Nasdaq 100, S&P 500, Dow Jones Industrial Average or Russell 2000 will have the best performance in the fourth quarter, Woods was confident in selecting one of the four major indexes.
“I would go with the Nasdaq 100.”
Woods said those stocks are poised to be the best performers in the fourth quarter.
Small Cap Breakout Or Fake Out?
Woods highlights the recent breakout of the small caps, which are often represented by the iShares Russell 2000 ETF (NYSE:IWM).
“Can this momentum continue?” Woods asks.
Woods said he is a noted hater of small caps after being burned several times before in rallies of the sector.
“I still don’t know if the small caps have the power to go higher.”
The market expert said the rally in small caps could be determined by future Federal Reserve policy, with the market likely pricing in three rate cuts before the end of the year.
Woods said the 10-year treasury yield going below 4% could be the catalyst to get small-cap stocks to show further gains in the fourth quarter or early 2026.
The X Factor In Q4 Noone Is Talking About
While Woods is confident that markets will trade higher in the fourth quarter, there is one x-factor that could increase volatility.
Woods said the x-factor for the fourth quarter is the Supreme Court decision on tariffs, a decision that could determine tariffs are illegal and have to be paid back.
“That throws off everything,” Woods said.
Woods said there was high uncertainty in the market around Liberation Day and the same uncertainty could be created by this Supreme Court ruling.
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