Current market environment performance of dynamic, risk-managed investment solutions.
By Daniel Poppe
Market snapshot
• Stocks: Stocks were down last week.
• Bonds: The 10-year Treasury yield rose last week.
• Gold: Spot gold rose last week, closing above $2,900 an ounce.
• Market indicators and outlook: 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 High and Rising, which favors stocks over gold and then bonds.
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The major U.S. stock market indexes were down last week. The Dow returned -2.33%, the S&P 500 returned -3.06%, the NASDAQ Composite returned -3.43%, and the Russell 2000 returned -4.01%. The 10-year Treasury bond yield rose from 4.24% to 4.32%. Spot gold closed the week up 1.79%.
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
The SPDR S&P 500 ETF (SPY), which tracks the performance of the S&P 500, finished the week below the 50-day moving average but above the 200-day moving average.
Stocks have fallen recently as concerns about a slowing U.S. economy grow. The Atlanta Fed’s most recent GDPNow estimate shows a contraction of 2.4% for the economy on an annualized basis for the first quarter of 2025. If the economy does contract, it will be the first period of negative growth since the second quarter of 2022.
Uncertainty over U.S. tariffs and the global response to them is also weighing heavily on the minds of investors. Effective tariffs lead to higher prices for consumers and less consumption of foreign goods, hindering the growth potential of the global economy.
Interest rates remain elevated compared to prior years, making it more difficult for borrowers to service new debt. This can hinder investment and economic development, but the Federal Reserve has been hesitant to lower rates too quickly with inflation still showing readings above their target levels.
AI enhancements have the potential to fuel growth and provide an opposing tailwind to the headwinds in the current environment, but the degree of productivity enhancements to result from them is uncertain.
Bonds
The iShares 7-10 Year Treasury Bond ETF (IEF), which tracks intermediate-term Treasury bonds, finished last week above both its 50-day and 200-day moving averages.
Bond prices have been rallying in contrast with the falling stock prices. This could be indicative of a rotation by investors from stocks to bonds in the face of uncertainty since bonds are often viewed as a safe-haven and a lower-risk investment than equities. Stocks and bonds are often used alongside each other in a portfolio just for this reason of being lowly or negatively correlated at times.
The FOMC is meeting next week, and market participants expect them to hold interest rates steady as seen in the CME Group’s FedWatch tool. The Fed is continuing to analyze incoming economic information and carefully weighing its dual mandate of low unemployment and stable prices. It will continue to maintain or adjust interest rates in an attempt to achieve both of those goals.
Gold
The SPDR Gold Shares ETF (GLD), which tracks the price of gold, finished the week above both its 50-day and 200-day moving averages.
Flexible Plan Investments (FPI) is the subadviser to the only U.S. gold mutual fund, The Gold Bullion Strategy Fund (QGLDX), designed at its introduction 11 years ago to track the daily price changes in the precious metal in a more tax-efficient manner than its ETF counterpart, GLD.
FPI’s indicators
The QFC S&P Pattern Recognition strategy’s primary signal started last week with a 90% net long exposure to the S&P 500. Exposure increased to a 10% net long exposure on Monday, a 30% net long exposure on Tuesday, a 70% net long exposure on Wednesday, a 40% net long exposure on Thursday, and a 50% net long exposure on Friday.
Our QFC Political Seasonality Index strategy was aggressive throughout the week. (Our QFC Political Seasonality Index is available—with all of the daily signals—post-login in our Weekly Performance Report section under the Domestic Tactical Equity category.)
The Volatility Adjusted NASDAQ strategy started the week with a 40% net long exposure to the NASDAQ 100. Exposure decreased to a 20% net long on Thursday and 0% on Friday.
The Systematic Advantage strategy started the week with a 90% net long exposure to the S&P 500. Exposure increased to 120% net long on Monday before returning to 90% net long on Tuesday.
Our QFC Self-adjusting Trend Following strategy’s primary signal began the week 100% net long the NASDAQ 100. This changed to 0% on Monday and increased to 200% net long on Friday.
The Volatility Adjusted NASDAQ, Systematic Advantage, QFC Self-adjusting Trend Following, and the QFC S&P Pattern Recognition strategies can use leverage, meaning their investment positions may exceed 100% at times.
Our Classic model remained in stocks throughout last week. Most of our Classic accounts follow a signal that will allow the strategy to change exposure in as little as a week. A few accounts are on platforms that are more restrictive and can take up to one month to generate a new signal.
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 High and Rising reading, which favors stocks over gold and then bonds from an annualized return standpoint. The combination has occurred 23% of the time since 2003. It is a stage of high risk for equities.