Current market environment performance of dynamic, risk-managed investment solutions.
By Will Hubbard
Market snapshot
• Equities: Stocks posted broad gains during the holiday-shortened week. The S&P 500, Dow Jones Industrial Average, and NASDAQ Composite each reached record highs. Eight of 11 sectors finished higher, led by Communication Services, which gained 4.97%.1,2,3
• Fixed income: Treasurys dipped as yields moved higher, with the 10-year ending the week at 4.49%.13,21
• Gold and commodities: Gold rose 0.82%. The U.S. Dollar Index declined 0.49%, providing some support. A weaker dollar can make gold less expensive for buyers using other currencies.16,20
• Market indicators and outlook: Equity signals were firmly risk-on this week, though some scaled back ahead of the long holiday weekend. Market regime indicators show the market is in a Normal economic environment stage, which is historically positive for stocks, bonds, and gold, though gold has also experienced meaningful drawdowns in this environment. 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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Equities
Stocks began the third quarter with broad gains and new records despite the holiday-shortened week. The S&P 500 rose 1.78%, the Dow Jones Industrial Average added 1.99%, and the NASDAQ Composite led the major indexes with a gain of 2.12%. All three set record highs.1,3 The Dow drew the most attention, closing near 52,900 midweek before briefly moving above 53,000 for the first time as the new week began.2,23
The gains were not driven solely by the usual mega-cap leaders. The NASDAQ 100 rose only 0.73%, trailing the broader NASDAQ Composite by a wide margin.1,2 Eight of 11 S&P 500 sectors advanced, and the Russell 2000 reached an all-time high, completing its best first half since 1991 as investors moved beyond large technology companies.10 Bespoke Investment Group cited the improvement in breadth as support for the bullish case.11
Communication Services led all sectors with a 4.97% gain. Meta rose about 9% after announcing plans for a cloud business that would sell excess AI computing capacity, reportedly through arrangements involving Anthropic and Google.7 Investors viewed the announcement as a potential offset to concerns about Meta’s rising AI capital spending, helping the sector advance despite uneven performance among other mega-cap technology stocks.8,9
Semiconductors were the main reason the NASDAQ 100 lagged. The VanEck Semiconductor ETF fell more than 5% on July 1 as investors took profits following a record quarter in which the group gained roughly 71%. Micron declined by about 11%.12 That early decline limited the NASDAQ 100’s weekly gain to 0.73%, even as the Dow reached new highs. Semiconductor shares later stabilized and participated in the rebound as the Dow moved above 53,000.2
Economic data also supported the move. June payroll growth fell well short of expectations, while unemployment edged lower.4,5 Investors generally took the combination as consistent with the Federal Reserve remaining on hold.
Broader participation matters because it reduces the market’s dependence on a small group of stocks. With eight sectors advancing and small caps leading, the week’s gains were less concentrated than they have often been. That does not eliminate risk, but it lowers the immediate vulnerability to a reversal in a single crowded trade. Our equity signals moved firmly risk-on, though exposure remains measured given the strength of current risk appetite.
Fixed income
The 10-year Treasury yield rose from approximately 4.37% to 4.49% during the holiday-shortened week.13,21 The increase weighed on Treasury prices and reflected continued uncertainty around inflation, economic growth, and the Federal Reserve’s next move.22
Yields briefly pulled back after June payroll growth fell short of expectations, but that reaction did not hold.4,14 The 10-year yield recovered as investors weighed the softer hiring number against a decline in the unemployment rate and broader concerns that inflation could keep long-term rates elevated.15,21 Despite signs of cooling in the labor market, the week’s move suggested that bond investors remain hesitant to price in a sustained decline in longer-term interest rates.
Gold and commodities
Gold rose 0.82% for the week, while Comex gold futures gained 0.72%. The U.S. Dollar Index declined 0.49%, providing some support. A weaker dollar can make gold less expensive for buyers using other currencies.20
Within Flexible Plan Investments (FPI’s) lineup, the Quantified Gold Futures Tracking Fund (QGLDX) returned 1.22%, ahead of spot gold’s 0.82% gain. Launched in 2013, the Quantified Gold Futures Tracking Fund is designed to track the daily price changes in the precious metal in a more tax-efficient manner than its ETF counterpart, GLD.
Gold continues to serve as a useful diversifier, and our positioning treats it as a complement to equity exposure rather than solely as protection during severe market stress.
The indicators
Our equity signals moved firmly risk-on this week. The QFC Self-adjusting Trend Following strategy began the week in cash, with 0% leverage from the prior Friday through Tuesday. It moved to 200% leverage on Wednesday and remained there throughout the week. The QFC S&P Pattern Recognition (QSPMX) strategy maintained a 200% net-long position throughout the week. Our QFC Political Seasonality Index was in its risk-on posture for the duration of the week. (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 40% long and moved to 60% long on Monday’s close. It increased to 80% long on Thursday’s close. The Systematic Advantage strategy started the week 90% long. It reduced exposure to 60% on Thursday’s close. 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 stage (meaning a positive monthly change in prices and a positive monthly change in GDP). Historically, a Normal environment has occurred 75% of the time since 2003 and has been a positive regime state for stocks, bonds, and gold. Stocks have the highest rate of return in Normal periods. Gold has the second-highest return but has also experienced high drawdowns in these environments.
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 28% of the time since 2003.
Sources
1. https://www.cnbc.com/2026/07/01/stock-market-today-live-updates.html
2. https://www.cnbc.com/2026/07/05/stock-market-today-live-updates.html
3. https://www.troweprice.com/personal-investing/resources/insights/global-markets-weekly-update.html
4. https://www.cnbc.com/2026/07/02/jobs-report-june-2026-.html
5. https://www.bls.gov/news.release/empsit.nr0.htm
6. https://media.bespokepremium.com/uploads/2026/06/062526-The-Closer-–-Breadth-Disconnects-Price-Hikes-PCE-–-43twrgeh46rthn.pdf
7. https://www.cnbc.com/2026/07/01/meta-stock-cloud-ai-compute.html
8. https://www.cnbc.com/2026/07/01/metas-plan-to-launch-a-cloud-business-eases-the-biggest-overhang-on-the-stock.html
9. https://www.cnbc.com/2026/07/02/metas-push-into-cloud-excites-wall-street-despite-lower-margins.html
10. https://www.cnbc.com/2026/06/30/small-cap-stocks-enjoy-best-first-half-since-1991-as-ai-trade-expands.html
11. https://media.bespokepremium.com/uploads/2026/06/TBR-Pros-and-Cons-Q326.pdf
12. https://www.cnbc.com/2026/07/01/chip-stocks-notched-record-rallies-in-second-quarter-start-q3-with-dud.html
13. https://www.cnbc.com/2026/07/02/us-treasury-yields-rise-as-investors-await-june-jobs-report.html
14. https://www.bloomberg.com/news/articles/2026-07-02/bonds-rally-as-weak-jobs-report-dims-fed-rate-hike-expectations
15. https://www.bls.gov/news.release/archives/empsit_07022026.htm
16. https://www.cnbc.com/2026/07/03/gold-silver-price-inflation-fed-rate-hike.html
17. https://www.kitco.com/news/article/2026-07-02/gold-bulls-charge-back-wall-street-and-main-street-after-weak-jobs-report
18. https://www.kitco.com/news/article/2026-07-06/gold-slips-fed-minutes-loom-hormuz-risk-eases-oil-shock-kitco-am-report
19. https://www.kitco.com/opinion/2026-07-01/gold-and-silver-reset-setup-heading-q3
20. https://tradingeconomics.com/united-states/currency
21. https://www.cnbc.com/2026/07/01/treasury-yields-us10y-kevin-warsh-fed.html
22. https://www.cnbc.com/2026/06/17/fed-interest-rate-decision-june-2026.html
23. https://www.cnbc.com/2026/07/02/dow-rides-into-new-week-at-record-high-what-investors-are-watching-ahead.html