Market Update 10/13/25

By Will Hubbard

Market snapshot

•  Stocks: Equity markets ended the week in the red. The S&P 500 fell 2.41%, the NASDAQ Composite lost 2.53%, and the Dow Jones Industrial Average declined 2.70%. Small-cap stocks took the brunt of the sell-off, with the Russell 2000 down 3.28% for the week.

•  Bonds: The benchmark 10-year Treasury yield fell to about 4.03% from 4.12%. Expectations for rate cuts were largely unchanged, suggesting the government shutdown and trade tensions may not significantly alter the Fed’s path.

•  Gold: Gold prices rose 3.28% last week to $4,017.79 per ounce, breaking above the $4,000 mark as renewed trade tensions with China increased demand for safe-haven assets.

•  Market indicators and outlook: Our strategy positioning was bullish overall. Market regime indicators show the market is in a Normal economic environment stage, which is historically positive for stocks, bonds, and gold but with a substantial risk of a downturn for gold. Normal is one of the best stages for stocks, with limited downside. Volatility is Low and Rising, which favors gold over stocks and then bonds.

For the latest information on our Quantified Funds, check out our weekly fund updates. You can also see the daily holdings of the funds here.

Stocks

If this update had been written at Thursday’s close, it would have described a fairly uneventful week, with modest moves across the major asset classes. Most of the week’s activity was driven by strength in AI-related names despite the ongoing government shutdown. On Wednesday, both the S&P 500 and NASDAQ closed at record highs.

Friday morning, however, brought a sharp reversal when markets were rattled by President Trump’s surprise announcement of a proposed 100% tariff on Chinese imports.

Aside from tariff headlines, the week was light on economic data. The only notable reports came Friday from the University of Michigan, which released its Consumer Sentiment and Inflation Expectations surveys. While overshadowed by tariff news, both came in slightly better than expected. The Consumer Sentiment Index registered 55, above the forecast of 54.1—higher readings indicate greater optimism. Inflation expectations came in at 4.6%, better than the previous report of 4.7%.

The tariff announcement triggered a broad sell-off, with the biggest declines concentrated in stocks that had led the market since early September. According to Bespoke Investment Group, the best-performing Russell 1000 stocks from September 2 through Thursday’s close were the worst performers on Friday, losing 4.7% on average.

Overall, while optimism about future growth continues to support equity markets, it can be quickly undermined by political surprises. The question is whether political uncertainty will overshadow the long-term growth potential driven by AI and technological innovation.

Bonds

Yields on the 10-year Treasury were range-bound last week, ending near the lower end of that range at 4.03%. Yields were generally stable despite Friday’s abrupt shift in market sentiment.

Implied market pricing for the Federal Reserve’s interest-rate path showed only modest changes. On Thursday, markets priced the terminal fed funds rate for the end of 2025 at around 3.66%, slightly higher than previous readings—suggesting that some economists might be reducing their expectations for rate cuts this year.

While short-term yields are driven by central banks, longer-term yields are shaped more by market demand and have remained steady, reflecting continued uncertainty about the path of inflation.

For fixed-income investors, short-term yields appear to be headed lower, though not likely to return to near-zero levels. Longer-term rates are expected to remain relatively stable as the market weighs growth and inflation pressures.

Gold

Gold continued its strong run, closing the week at $4,017.39 per ounce. It broke decisively above the $4,000-per-ounce mark as President Trump’s new tariff announcement on China boosted demand for perceived safe-haven assets.

Silver also rallied. After languishing for almost a decade since the 2011 government debt crisis, it too reached new all-time highs.

Flexible Plan Investments (FPI) is the subadviser to the only U.S. gold mutual fund, The Gold Bullion Strategy Fund (QGLDX). Launched in 2013, the fund is designed to track the daily price changes in the precious metal in a more tax-efficient manner than its ETF counterpart, GLD.

The indicators

The QFC S&P Pattern Recognition strategy’s primary signal started the week 80% long. It reduced exposure to 60% long on Monday and Tuesday, then to 10% long. On Wednesday, it increased exposure to 50% long, where it remained until Friday, when it bought into the sell-off, closing the week 60% long.

Our QFC Political Seasonality Index strategy started the week in its risk-off posture and remained there until Friday’s close, when it moved to 100% risk-on. (The QFC Political Seasonality Index—with all of the daily signals—is available post-login in our Weekly Performance Report section under the Domestic Tactical Equity category.)

Our intermediate-term tactical strategies have been varied in their degree of defensive positioning. The key advantage these strategies offer investors is their ability to adapt to changing market environments—participating during uptrends and moving to a defensive posture during downtrends.

The Volatility Adjusted NASDAQ strategy started the week 200% long and remained there throughout the week. The Systematic Advantage strategy remained 90% long throughout the week. Our QFC Self-adjusting Trend Following strategy started the week 200% long and moved to 0% on Friday’s close following the market sell-off. (These strategies can employ leverage, so their exposure may at times exceed 100%.)

Our Classic model was fully risk-on all week. Most Classic accounts follow a signal that can change exposure within a week, though a few are on platforms that require up to a month to adjust to new signals.

FPI’s Growth and Inflation measure is one of our Market Regime Indicators. It shows that we are in a Normal economic environment stage (meaning a positive monthly change in prices and a positive monthly change in GDP). Historically, a Normal environment has occurred 60% of the time since 2003 and has been a positive regime state for stocks, bonds, and gold. Gold tends to outpace both stocks and bonds on an annualized return basis in a Normal environment but carries a substantial risk of a downturn in this stage.

Our S&P volatility regime is registering a Low and Rising reading, which favors gold over stocks and then bonds from an annualized return standpoint. The combination has occurred 27% of the time since 2003. It is a stage of relatively low risk across the asset classes.