Market Update 11/3/25

By Will Hubbard

Market snapshot

•  Stocks: The Fed’s rate cut and resilient corporate earnings pushed most major indexes higher last week. The S&P 500 gained 0.72%, the NASDAQ Composite added 2.25%, and the Dow Jones Industrial Average increased by 0.75%. The small-cap Russell 2000 fell 1.35%.

•  Bonds: Treasury yields inched higher as markets absorbed the Fed’s rate cut and remained optimistic about a soft landing. The 10-year U.S. Treasury yield rose to 4.08% from 4.00%.

•  Gold: Prices slipped as investors shifted toward riskier assets, such as stocks. Gold fell 2.68% to $4,002.92 per ounce.

•  Market indicators and outlook: Overall, our strategy positioning started the week bullish and turned more defensive by Friday. Market regime indicators show a Normal economic environment—historically positive for stocks, bonds, and gold but carrying higher downside risk for gold. Volatility is High and Rising, which favors stocks over gold 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

Equities closed both the final week of October and the month itself on a high note, capping one of the strongest stretches of the fall. Investors spent much of the month balancing a complex mix of macroeconomic optimism and lingering structural risks, all while the U.S. government remained shut down.

The tone early in October was volatile. President Trump’s back-and-forth on Chinese tariffs caused sharp swings in the S&P 500 during the first few trading sessions, but by month-end, the market had found its footing. The S&P 500, Dow Jones, and NASDAQ each advanced for the week, leaving all three major indexes hovering near record territory.       

As the year winds down, conditions could set up a “Santa rally” (a seasonal year-end rise in stock prices) if monetary policy remains dovish and corporate earnings momentum holds. The dominant narrative continues to center on the interplay between inflation, growth, and expectations for the Federal Reserve.

Inflation data released in October came in softer than expected, reinforcing the view that prices are cooling without materially undercutting economic activity. The Fed’s preferred measure, the core personal consumption expenditures (PCE) price index, continued its steady deceleration. Several regional manufacturing indexes also showed tentative signs of stabilization after months of contraction.

Consumer confidence edged higher, underpinned by a resilient labor market and easing energy costs. While several large employers announced layoffs tied to ongoing AI integration, household spending has remained steady. Together, these factors have given investors reason to believe in a “soft landing” scenario—one where growth slows just enough to tame inflation but not enough to cause a recession.

That belief gained traction after the Fed announced a 0.25% rate cut, confirming what markets had already anticipated. The policy shift fueled demand for duration-sensitive assets, particularly large-cap growth and technology stocks.

On the geopolitical front, headlines around a preliminary U.S.–China trade framework also lifted risk appetite. While no formal deal has been finalized, the perception of diplomatic progress and a willingness to cooperate helped energize global equities and commodity-linked sectors.

Still, the government shutdown has muted domestic data releases, forcing economists and investors alike to rely on partial indicators and forward guidance rather than hard evidence of the economy’s health. The absence of new data adds uncertainty. If delayed reports eventually show that growth held up better than feared, markets could rally into year-end; if not, a sharper correction remains possible.

The current equity rally has been driven more by the absence of bad news than by evidence of stronger growth. The economy isn’t booming, but it isn’t breaking either—and that’s been enough to give markets confidence that the Fed can gradually pivot from restrictive to accommodative policy. Whether that optimism proves justified will depend on what the data reveal once government operations resume and a clearer picture of underlying growth and employment emerges.

For now, sentiment remains constructive, supported by slowing inflation, manageable energy costs, and investors eager to stay exposed to risk assets as long as policy conditions remain favorable.

Bonds

Bond yields eased modestly last week after the Federal Reserve’s rate cut supported expectations for further cuts ahead. The 10-year Treasury yield settled near 4.08%, down from recent highs of around 4.3% and just off the year’s lows. Treasury yields initially slipped early in the week as traders anticipated stronger data but steadied after the Fed’s announcement.

Investors remain positioned for a “soft landing”: inflation continues to drift lower, growth appears resilient, and credit spreads have stayed tight across both investment-grade and high-yield markets. Demand for high-quality, longer-term bonds remains strong, particularly among institutional buyers who expect additional cuts in 2026.

The ongoing government shutdown has left traders navigating without key data, forcing them to rely more on Chair Jerome Powell’s comments than on hard economic evidence. That dynamic has created an unusually optimistic environment in which investors are willing to take on risk but remain mindful that an inflation surprise or hawkish pivot could quickly reverse recent gains.

 Overall, the yield curve continues to normalize, and investors holding longer-duration assets have been rewarded—an advantage that could persist if the Fed maintains its shift toward easing.

Gold and commodities

Gold, which has been in a powerful uptrend for much of 2025, paused last week as investors rotated back toward equities. Prices dipped slightly after the Federal Reserve’s rate cut and improving risk sentiment drew capital away from traditionally defensive assets, such as stocks and bonds. The metal had benefited earlier in the year from geopolitical tensions, but with equities rallying and the U.S. dollar holding firm, some of those tailwinds have faded.

Energy markets steadied as optimism about global trade and perceived stronger demand returned. Industrial and precious metals tied to the AI supply chain—including copper, lithium, and silver—also attracted renewed speculative interest.

Gold remains in a longer-term uptrend that could continue if central banks keep easing or if inflation expectations rise again. Near-term risks, however, are building. A stronger dollar, improving risk appetite, or firmer-than-expected inflation data could all weigh on prices. For now, gold appears to be consolidating within a higher range for the second time this year, reflecting a market that’s neither fearful nor fully convinced that the soft landing is secure.

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 70% long. It cut exposure to 30% short on Monday and to 0% on Tuesday. On Wednesday, it moved to 20% short, then to 30% short on Thursday, before returning to cash on Friday’s close.

Our QFC Political Seasonality Index started the week in its risk-off posture but shifted to its 100% risk-on posture at Monday’s close, where it remained for the rest 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. Their key advantage is their ability to adapt to changing market environments—participating during uptrends and moving to defensive postures during downtrends.

The Volatility Adjusted NASDAQ strategy started the week 100% long, moved to 160% long on Monday’s close, increased to 180% long on Wednesday’s close, and returned to 160% long on Friday’s close. The Systematic Advantage strategy started and ended the week 90% long. Our QFC Self-adjusting Trend Following strategy started the week 200% long, moved to 100% long on Wednesday’s close, and went to cash on Friday’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; however, a few remain 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 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 stocks and gold.