Market insights and analysis

By Will Hubbard

Market snapshot

•  Stocks dropped sharply following President Trump’s tariff announcement.

•  Bond yields dipped lower as investors moved to investment safe havens.

•  Gold hit a record high before retreating but remains up over 13% year to date.

•  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. While this favors stocks over gold and then bonds, it is also a period of high risk for equities.

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Equity markets broadly retreated last week. The S&P 500 fell 9.05%, the NASDAQ Composite lost 9.99%, the Dow Jones Industrial Average declined by 7.82%, and the small-cap Russell 2000 dropped 9.64%. Bond yields also declined, with the 10-year Treasury falling from 4.25% to 4.00%. Gold briefly hit an all-time high before getting pulled into the sell-off, closing Friday at $3,038.24 per ounce.

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

Last week’s markets were gripped by turbulence, as a convergence of escalating trade tensions, mixed economic signals, and rising volatility across asset classes drove significant investor unease. Equities endured their worst weekly performance in years, but the impact was felt across bonds and commodities as well. Gold hit a new all-time high before pulling back, and Treasury yields bounced off multi-month lows.

Equity markets endured a broad and severe sell-off, marking one of the most volatile stretches since the early days of the COVID-19 pandemic. The S&P 500 tumbled 9.05% to close at 5,074.08, shedding over 500 points and firmly entering correction territory. The Dow Jones Industrial Average fell 7.82%, and the tech-heavy NASDAQ slid 9.99%, driven by sharp declines in major technology stocks.

Nearly half of all S&P 500 components lost more than 10% of their value last week. Companies tied to manufacturing and international trade were hit hardest following President Trump’s announcement of sweeping new tariffs on all major U.S. trading partners. China quickly responded with retaliatory threats, adding to market uncertainty. Even a strong jobs report in March couldn’t lift sentiment, as fears of economic slowdown and inflation from rising input costs weighed on investor outlook.

Friday was especially dramatic, with the Dow registering its third-largest single-day point drop in history—over 2,200 points. It’s important to remember that point losses today represent smaller percentage changes than in years past. Apple shares suffered a historic blow, falling 16% over two days in their worst performance since the 2008 financial crisis.

Despite the rough equity action, economic data offered a mixed view: 

•  Nonfarm payrolls rose by 228,000 in March, well above the expected 137,000. 

•  The unemployment rate ticked up to 4.2% due to higher labor force participation. 

•  The ISM Manufacturing PMI slipped to 49.0, signaling the first contraction in factory activity this year. 

•  The trade deficit narrowed from $131 billion in January to $123 billion in February, despite tariff headwinds. 

•  Job openings totaled 7.57 million. 

•  Average hourly earnings rose 0.3% for the month. 

•  Consumer sentiment continues to weaken, driven by fears of inflation and continued uncertainty around trade policies.

The sharp market correction also drew comparisons to past market downturns. According to historical data, last Thursday and Friday marked the fifth-largest two-day drop for the S&P 500 since 1950. Following such extreme episodes, the S&P’s forward one-year returns have often been strong—ranging from 9% to 62% in the top 10 past cases—suggesting that market panic can sometimes lead to recovery opportunities. The VIX—the market’s “fear gauge”—experienced its third-largest weekly spike since 1990. Looking back at similar volatility events, 18 of them have one-year histories, and 14 of those showed positive returns over the next 12 months, with an average gain of 11.3%. That doesn’t guarantee a turnaround, but it does reinforce the idea that periods of heightened pessimism can be important inflection points.

For investors, this presents a moment to reassess: Are portfolios diversified? Are there strategies in place to manage ongoing volatility? Now may be a good time to consider balancing traditional equity exposure with a mix of passive and active management—and even looking to diversifying strategies, such as commodity trading advisors (CTAs), that may be better suited for uncertain environments.

Bonds

In the bond market, a pronounced flight to safety took shape. The yield on the 10-year Treasury note dropped to 4.00%, its lowest level since October 2024. Investors flooded into high-quality bonds as equity volatility spiked.

Credit spreads widened notably across the board but remain below historical crisis levels. Investment-grade corporate bond spreads increased by 20 basis points to 114 basis points. High-yield bond spreads expanded by 98 basis points for the week and are up 170 basis points over the past month.

This widening spread reflects rising concerns about credit risk. However, it hasn’t yet signaled outright recession fears, which would typically involve more dramatic dislocations in credit markets.

Gold

Gold surged to new all-time highs early in the week before selling off on Thursday and Friday, as investors turned to safe-haven assets amid geopolitical uncertainty and financial market stress. Spot gold hit $3,161.37 an ounce on April 3, breaking decisively through the $3,100 level and cementing its reputation as a crisis hedge. It eventually receded, closing the week down 1.52% at $3,038.24 per ounce.

Despite the late-week decline, gold remains up over 13% year to date, including a gain of more than 9% in March alone. The rally has been fueled by a combination of concerns about global economic slowdown, surging demand from central banks, strong ETF inflows, and a weakening U.S. dollar. In response to these factors, Goldman Sachs raised its year-end gold target to $3,300.

In a market characterized by heightened equity volatility and conflicting economic data, gold’s strength highlights a growing interest in exposure to alternatives—whether through gold, Treasurys, or more sophisticated volatility-oriented strategies. Gold and other nontraditional investments, such as managed futures, seem to be opening up opportunities should we head into a more volatile market environment.

Flexible Plan Investments 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.

The indicators

The QFC S&P Pattern Recognition strategy started last week 40% long, moved to 100% long on Monday, cut exposure to 90% long on Wednesday, shifted to 10% short on Thursday, and then flipped signals Friday to close 30% long. Our QFC Political Seasonality Index remained in its risk-on posture for 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.)

Our intermediate-term tactical strategies have been varied in their degree of defensive positioning. The key advantages these strategies offer to investors are their ability to adapt to changing market environments, participate during uptrends, and adjust exposure to more defensive posturing during downtrends.

The Volatility Adjusted NASDAQ (VAN) strategy started the week in its money market “cash” position. On Friday’s close, it moved to 40% short. The Systematic Advantage (SA) strategy maintained a 60% long position throughout the week. Our QFC Self-adjusting Trend Following (QSTF) strategy saw no trends and remained 100% in cash. VAN, SA, and QSTF can all employ leverage, so investment positions may sometimes exceed 100%.

Our Classic model was long risk-on positioning all 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 more restrictive platforms 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.