Market Update 3/23/26

By Will Hubbard

Market snapshot

•  Equities: U.S. equities struggled for the fourth consecutive week. The S&P 500 fell around 1.87%, the NASDAQ Composite declined approximately 2.06%, the Dow Jones Industrial Average lost about 2.09%, and the small-cap Russell 2000 fell roughly 1.65%.

•  Fixed income: Interest rates moved higher while bond prices sold off. The benchmark 10-year Treasury yield rose to 4.38%, continuing its recent move higher.

•  Gold and commodities: Energy continued to rally amid tensions in the Middle East. Gold posted its worst week since 2011, falling 10.50%.

•  Market indicators and outlook: Our strategies generally remained exposed, though some began to show caution given the current market environment. 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 Falling, which favors gold over bonds and then stocks.

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Equities

Stocks attempted to stabilize last week, with a few brief rallies, but none gained traction. By Friday, selling pressure returned, and equities ended the week lower on rising oil prices, a cautious Federal Reserve, and ongoing geopolitical tensions. As a result, the S&P 500, Dow, and NASDAQ each posted a fourth straight weekly loss, while the Russell 2000 small-cap index entered correction territory, down just over 10% from its all-time high.

The Federal Reserve is no longer providing the same level of support for markets. Until recently, markets closely monitored Fed announcements, driven by expectations of continued low rates, which helped funnel money into equities and push markets higher. Last week, the Fed left rates unchanged between 3.50% and 3.75%, as expected, but struck a more cautious tone. Its statement noted that economic activity continues to expand at a solid pace, while job gains remain low and inflation is still somewhat elevated. That is not the kind of backdrop that gives investors confidence that easier policy is right around the corner.

Economic data was light during the week. February industrial production rose 0.2% following a 0.7% gain in January, suggesting that the supply side of the economy continues to expand, albeit at a slower pace.

Geopolitical developments remain a key factor. While the Trump administration has indicated that the conflict with Iran may be short-lived, Iran may view the situation differently. For Iran, particularly its leadership, the conflict is viewed as a significant threat. As a result, there is a risk that traffic through the Strait of Hormuz could remain disrupted longer than expected.

Bespoke Investment Group noted, “While Saudi Arabia is exporting roughly 4.2mm barrels per day via the Red Sea and Iran’s exports appear unimpacted, roughly 15% of global supply is stuck because of a conflict that only looks to be intensifying.”

For investors, this underscores the uncertainty that geopolitical events can introduce into financial markets and the broader economy. In that kind of environment, investment decisions are best grounded in a disciplined, rational approach rather than driven by fear or emotion. Quantitative and systematic models can help by using historical data to inform decision-making. While the past does not repeat exactly, it can provide useful context for how markets may behave under similar conditions.

Fixed income

Treasurys sold off on geopolitical concerns and the Federal Reserve’s cautious tone. The move was fairly significant, with the 10-year yield rising from 4.28 to 4.38%.

That move aligns with the broader inflation picture. February producer prices rose 0.7%, following a 0.5% increase in January. The headline consumer price index (CPI) had already come in at 2.4% year over year, with core CPI at 2.5%. Inflation is no longer at peak levels, but it is not low enough for the market—or the Fed—to fully relax, especially with oil prices moving higher. Bonds remain stuck in an uncomfortable middle ground, where slower growth could matter later, but inflation still matters now.

Bonds appear to be providing some stability, but the bigger concern is the potential for broad, correlated sell-offs that impact both equities and fixed income. Ideally, bonds would act as a stabilizing force when equity markets decline. Recently, though, they haven’t held up as well, with inflation still slightly above trend.

Gold and commodities

Commodities led the way last week, driven largely by energy. Oil prices rose on rising concerns about Middle East supply and potential disruptions in the Strait of Hormuz. Crude pushed higher, putting immediate pressure on inflation expectations. By Friday, Brent crude closed just over $112.

Gold, on the other hand, did not provide stability. The yellow metal lost 10.50% last week, declining from $5,019.49 to $4,492.42. Instead of benefiting from geopolitical uncertainty, it sold off. Higher yields and a stronger U.S. dollar added to the pressure. MarketWatch noted that gold suffered its worst weekly percentage decline since 2011.

Gold remains a valuable diversifier and has historically shown low correlation with stocks and bonds. However, this serves as a reminder that it is also sensitive to other macroeconomic factors, such as real rates and the U.S. dollar.

Flexible Plan Investments (FPI) is the subadviser to the only U.S. gold mutual fund, The Quantified Gold Futures Tracking Fund, formerly The Gold Bullion Strategy Fund. 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

QFC S&P Pattern Recognition strategy started the week 140% long, increased to 170% long on Monday, dropped to 160% long on Tuesday, cut back to 20% on Thursday, and increased to 70% long on Friday. Our QFC Political Seasonality Index started and ended the week in its risk-on posture. (Our 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 and ended the week 40% long. The Systematic Advantage strategy started the week 60% long, moved to 30% long on Monday, returned to 60% long on Tuesday, and decreased to 30% long on Friday. Our QFC Self-adjusting Trend Following strategy started the week in cash, moved to 200% long on Tuesday, and moved back to cash on Thursday, where it remained for the rest of the week. These strategies can employ leverage, so their exposure may exceed 100% at times.

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 remain on platforms requiring up to a month to adjust to new signals.

FPI’s Growth and Inflation measure—one of our Market Regime Indicators—shows that we are in a Normal economic environment, defined by positive monthly changes in both prices and GDP. A Normal environment has occurred 75% of the time since 2003 and has been positive for stocks, bonds, and gold. Stocks have delivered the highest rate of return in Normal periods, while gold has ranked second but has also experienced high drawdowns.

Our S&P volatility regime is registering a High and Falling reading, which favors gold over bonds and then stocks from an annualized return standpoint. The combination has occurred 13% of the time since 2003. It is a stage of strong returns for gold.