by David Robertson | Jan 23, 2026 | Market Commentary
Market Commentary
The fourth quarter of 2025 capped a strong year for most asset classes, though market gains were accompanied by increased volatility as investors balanced optimism around policy easing with episodic political and macro uncertainty. After a robust rally through much of the year, equities entered Q4 on firmer footing, supported by continued progress on inflation and clearer guidance from the Federal Reserve. Sentiment was periodically tested by a U.S. government shutdown in the first half of the quarter, which raised concerns around near-term growth disruptions and policy dysfunction. While markets initially reacted with caution, the shutdown ultimately proved short-lived and largely contained, allowing investors to refocus on fundamentals. Earnings reports for the quarter were generally solid, with a majority of companies meeting or modestly exceeding expectations, reflecting resilient margins and continued pricing discipline despite slower revenue growth. Results were strongest among firms tied to infrastructure, industrial activity, and AI-related investment, while more consumer-sensitive areas showed greater dispersion. The S&P 500 finished the quarter up 2.7%, extending its 2025 advance, while global equities (MSCI ACWI) also posted solid gains of 3.3%. Fixed income performed well, with core bonds advancing 1.1% as yields declined further following the Fed’s rate cuts and reinforced expectations for additional easing in 2026.
The dominant narrative of the quarter centered on the transition from restrictive to supportive monetary policy, even as fiscal uncertainty briefly resurfaced. Economic data continued to signal moderation rather than contraction, with job growth slowing and consumer spending becoming more selective but resilient. Inflation made additional progress toward the Fed’s target, reinforcing confidence that price pressures were no longer a binding constraint. In December, the Federal Reserve delivered another rate cut and reiterated its data-dependent but increasingly accommodative stance. Markets largely looked through the government shutdown, viewing it as a political event with limited lasting economic impact. Meanwhile, corporate fundamentals remained supportive, particularly among companies levered to long-term capital investment trends, with ongoing commitments to AI-related CapEx—spanning semiconductors, datacenters, and cloud infrastructure—continuing to underpin earnings expectations.
Looking ahead to 2026, the market outlook remains constructive. We expect economic growth to continue to be strong, supported by easing financial conditions, resilient consumer and corporate balance sheets, and sustained investment in productivity-enhancing technologies. As earnings growth becomes less concentrated among a narrow group of mega-cap companies, there is potential for market leadership to broaden beyond the themes that have dominated recent years. This would mark a notable shift from the post-pandemic period, when a small subset of stocks drove a disproportionate share of market performance. While valuations in select areas and lingering policy risks warrant ongoing discipline, a backdrop of solid growth and broader earnings participation may provide a healthier and more durable foundation for returns, reinforcing the importance of diversification and active risk management.
Portfolio Commentary
Equity Sleeve: We continue to maintain a mix of active and passive strategies across our equity exposures, with an emphasis on diversification across regions, styles, and market capitalizations. After a strong year for global equities in 2025, we remain constructive on international allocations given still-attractive relative valuations versus U.S. large caps and the diversification benefits that come from broader geographic exposure. We are decreasing passive exposure to US Value in favor of a global actively managed strategy. Within U.S. equities, we continue to balance large cap exposures with an overweight to mid and small cap stocks where relative valuations remain compelling and earnings participation has the potential to broaden as we move through 2026. While small and mid caps have lagged the S&P 500 in recent periods, our allocation to active managers has helped improve results through differentiated security selection and style tilts. We are also maintaining targeted allocations to our Dividend and Growth stock baskets, which were recently refined to better align with momentum, quality, and income characteristics in the current market environment.
Fixed Income Sleeve: Fixed income remains an important stabilizer within portfolios as markets transition from a restrictive policy environment toward a more accommodative stance. While expectations for additional Federal Reserve cuts have supported bond returns, the path forward remains data-dependent and rate volatility may persist as investors weigh inflation progress, growth resilience, and shifting policy expectations. Within credit markets, spreads remain historically tight, which reinforces the importance of discipline and selectivity across corporate and securitized exposures. We continue to rely on our core active fixed income manager to navigate both duration and credit positioning, while also evaluating more tax-efficient implementation where appropriate. For high-tax-bracket investors, municipal bonds remain a compelling option as part of the liquidity and income allocation, helping enhance after-tax yield while maintaining a high-quality risk profile.
Alternatives Sleeve: To further diversify portfolio returns and reduce reliance on traditional stock and bond exposures, we utilize a blend of yield-oriented and hedged equity strategies designed to provide a smoother return profile across market environments. This sleeve is intended to complement—not replace—core fixed income by helping balance total return potential with less equity volatility, particularly during periods of market uncertainty or elevated valuations. Included in this allocation are strategies that generate income through options-based approaches, maintain modest equity participation with built-in risk management, and seek to dampen overall drawdowns while still allowing for participation in rising markets. These strategies may lag during sharp, momentum-driven equity rallies, but they can be especially beneficial in sideways or choppier markets where consistency and downside mitigation become more valuable.
Securities and advisory services offered through LPL Financial, a registered investment advisor, Member FINRA/SIPC
The commentary in this report is not a complete analysis of every material fact in respect to any company, industry, or security. The opinions expressed here are not investment recommendations, but rather opinions that reflect the judgment of Horizon as of the date of the report and are subject to change without notice. Forward-looking statements cannot be guaranteed. We do not intend and will not endeavor to provide notice if or when our opinions or actions change. This document does not constitute an offer to sell or a solicitation of an offer to buy any security or product and may not be relied upon in connection with the purchase or sale of any security or device.
Equity markets are represented by the S&P 500 Index. The S&P 500 is a market-capitalization-weighted index of the 500 largest U.S. publicly traded companies. The MSCI All Country World Index (ACWI) is a global equity index that tracks the performance of large- and mid-cap stocks in developed and emerging markets. The Bloomberg U.S. Aggregate Bond Index is a broad-based benchmark that measures the investment grade U.S. dollar-denominated, fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, mortgage-backed securities, asset-backed securities and collateralized mortgage-backed securities. References to indices, or other measures of relative market performance over a specified period of time are provided for informational purposes only. Reference to an index does not imply that any account will achieve returns, volatility, or other results similar to that index. The composition of an index may not reflect the manner in which a portfolio is constructed in relation to expected or achieved returns, portfolio guidelines, restrictions, sectors, correlations, concentrations, volatility or tracking error targets, all of which are subject to change. Indices are unmanaged and do not have fees or expense charges, both of which would lower returns. It is not possible to invest directly in an unmanaged index.
This commentary is based on public information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied on as such.
Horizon Investments and the Horizon H are registered trademarks of Horizon Investments, LLC.
© 2025 Horizon Investments
by Juliet K | Oct 24, 2025 | Market Commentary
Market Commentary
The third quarter of 2025 extended gains in most asset classes, marked by alternating bouts of optimism and anxiety as investors weighed slowing growth against the potential for policy easing. After a strong rebound in Q2, equity markets began the quarter on uncertain footing amid weaker-than-expected economic data and renewed trade rhetoric. However, by late August, sentiment had improved as inflation continued to moderate and expectations for a Federal Reserve rate in September solidified. The S&P 500 ended the quarter up 8.1%, building on its first-half gains, while global equities (MSCI ACWI) rose 7.6%, supported by renewed strength in developed Asia and parts of Europe. In fixed income, core bonds (Bloomberg U.S. Aggregate Bond Index) advanced 2.0% as yields declined modestly on growing conviction that more cuts to the policy rate are coming. Credit spreads tightened modestly, underscoring continued confidence in corporate balance sheets and a benign default outlook.
The third quarter narrative revolved around the interplay between a cooling economy and the market’s increasing anticipation of monetary support. U.S. economic data pointed to slower but still positive growth, with payroll gains moderating and consumer confidence softening, particularly in lower-income segments. Meanwhile, inflation readings continued to drift lower, with the core PCE index approaching the Fed’s 2% target for the first time in nearly four years. Against this backdrop, the Fed cut interest rates in September by 25 bps and signaled more cuts to come through the end of 2026. Additionally, continued corporate plans for CapEx spending, especially around AI and datacenters, was met with enthusiasm by investors as that new technology continues to emerge as a major theme in economic growth. Markets interpreted these shifts as a green light for risk assets, fueling a late-quarter rally across equities, credit, and even longer-duration Treasuries.
Globally, signs of stabilization emerged in China and Europe after several quarters of sluggish performance. Chinese policymakers unveiled additional stimulus measures targeting domestic demand and small businesses, while the European Central Bank reinforced its commitment to accommodative policy amid persistently weak growth. These developments, combined with a modest pullback in the U.S. dollar, helped support international equities and commodities, particularly industrial metals and energy. Meanwhile, geopolitical tensions—while still simmering in Eastern Europe and the Middle East—remained largely contained, allowing investors to refocus on fundamentals. Sector leadership broadened as cyclical and value-oriented areas participated in the rally, with financials and industrials outperforming after months of lagging technology-driven returns.
Looking ahead to the final quarter of 2025, the market’s trajectory will likely hinge on the Fed’s policy follow-through and the durability of disinflation trends. Corporate earnings revisions have turned slightly positive, suggesting that companies are navigating the slower-growth backdrop with improved efficiency and cost discipline. While risks remain—from policy missteps to renewed geopolitical flare-ups—the combination of easing inflation, stable credit conditions, and the prospect of monetary accommodation provides a constructive foundation heading into year-end. As always, we remain focused on disciplined diversification and active risk management in navigating what continues to be an evolving and opportunity-rich market environment.
Portfolio Commentary
Equity Sleeve: We continue to maintain a mix of active and passive strategies across our equity exposures. International equities have added meaningful value to our portfolio performance thus far in 2025 and we are maintaining that allocation due to the backdrop of lower relative valuations (vs. US Large Cap stocks) and the potential persistence of a weakening dollar. Relative to broad equity benchmarks, we are overweight mid and small cap stocks due to low relative valuations, recent momentum, and potential tailwinds due to the current US Administration. Though small and mid cap stocks have lagged large caps this year, our allocations to active managers have been beneficial. We have also updated our Dividend and Growth stock baskets to better reflect targeted momentum and dividend characteristics.
Fixed Income Sleeve: Fixed Income continues to experience volatility as markets anticipate how many Fed cuts, we can expect in 2025. In the aftermath of significant inflation and a historically fast rate hiking cycle, fixed income has proven to be a helpful defensive ballast in portfolios during the tariff environment over the past quarter. However, potential risks within credit markets as credit spreads remain historically tight. We will continue to rely on our core active manager to help navigate a changing rate and credit environment.
Alternatives Sleeve: To further diversify the fixed income portion of portfolios, we use a blend of diversified, balanced, and active managers designed to help navigate choppy markets. This strategy is meant to complement, not replace traditional fixed income as we aim to produce meaningful real returns while maintaining the primary focus of fixed income which is diversification from stock volatility. Included in this sleeve are strategies that use options to either provide modest equity exposure, reduce portfolio volatility, or generate income. These strategies experienced significant up capture relative to fixed income in the sharp equity market rally in the second quarter.
Securities and advisory services offered through LPL Financial, a registered investment advisor, Member FINRA/SIPC
The commentary in this report is not a complete analysis of every material fact in respect to any company, industry, or security. The opinions expressed here are not investment recommendations, but rather opinions that reflect the judgment of Horizon as of the date of the report and are subject to change without notice. Forward-looking statements cannot be guaranteed. We do not intend and will not endeavor to provide notice if or when our opinions or actions change. This document does not constitute an offer to sell or a solicitation of an offer to buy any security or product and may not be relied upon in connection with the purchase or sale of any security or device.
Equity markets are represented by the S&P 500 Index. The S&P 500 is a market-capitalization-weighted index of the 500 largest U.S. publicly traded companies. The MSCI All Country World Index (ACWI) is a global equity index that tracks the performance of large- and mid-cap stocks in developed and emerging markets. The Bloomberg U.S. Aggregate Bond Index is a broad-based benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, mortgage-backed securities, asset-backed securities and collateralized mortgage-backed securities. References to indices, or other measures of relative market performance over a specified period of time are provided for informational purposes only. Reference to an index does not imply that any account will achieve returns, volatility, or other results similar to that index. The composition of an index may not reflect the manner in which a portfolio is constructed in relation to expected or achieved returns, portfolio guidelines, restrictions, sectors, correlations, concentrations, volatility or tracking error targets, all of which are subject to change. Indices are unmanaged and do not have fees or expense charges, both of which would lower returns. It is not possible to invest directly in an unmanaged index.
This commentary is based on public information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied on as such.
Horizon Investments and the Horizon H are registered trademarks of Horizon Investments, LLC.
© 2025 Horizon Investments
by Cissy Blanchard | Apr 15, 2025 | Market Commentary
Market Commentary
The first quarter of 2025 saw domestic stocks under pressure (S&P 500 down 4.3%) while international equities rallied (MSCI EAFE up 6.9%). Core bonds fared well in the face of volatility (Bloomberg U.S. Agg Bond Index up 2.8%).
2025 began with optimism in global equity markets. January saw solid gains driven by resilient U.S. economic data. Optimism around further deregulation and more favorable tax policies also contributed to rising business and consumer sentiment. In February, the tech space and specifically companies at the forefront of Artificial Intelligence were thrust into the spotlight when the emergence of DeepSeek’s AI breakthrough bolstered sentiment towards Chinese technology companies. These developments brought scrutiny towards the dominance and valuations of U.S. tech companies. Concurrently, geopolitical events unraveled with the U.S. breaking away from its longstanding approach of exerting influence through aid and defense support to many allies, leading to those countries looking to bolster their own national defenses through fiscal spending. Germany was the standout, pledging €500 billion towards a future infrastructure and defense spending package. The U.S. took a different approach, pledging to cut government spending and creating the Department of Government Efficiency (DOGE) that looked to eliminate government waste.
Throughout these very meaningful events, the Trump administration had been discussing imposing tariffs on global trading partners that were “taking advantage of the U.S.” as well as on friendlier trading partners like Mexico and Canada, where tariffs were being threatened as a way to beef up border security to combat fentanyl and other dangerous drugs coming into America. The exact goal of the tariffs and the extent to which our trading partners would be impacted were unclear, leading to uncertainty in the business and investing landscape. U.S. equities saw extreme volatility and outflows from international investors due in part to political pressure and in part due to the relatively less volatile developed international markets.
2025 has been eventful through the first 3 months and the headlines are still coming in fast. In the early days of April, we have seen a global tariff policy announced by the Trump administration that imposed significant “reciprocal” tariffs based on trade deficits leading to responses by those countries ranging from retaliatory to wanting to negotiate. Global markets have sold off in response to the higher than feared policy and an unclear path forward in the coming months. We anticipate continued market volatility in the near term as investors await further clarity on these economic policies.
Portfolio Commentary
Equity Sleeve: We continue to maintain a mix of active and passive strategies across our equity exposures. While international equities look attractive with the backdrop of lower relative valuations and potential persistence of a weakening dollar, we still favor a domestic tilt to US Stocks. We are allocating more to Value and equity funds that exhibit a defensive bias as we navigate near term policy uncertainty. Relative to broad Large Cap Equity benchmarks, we are overweight mid and small cap stocks.
Fixed Income Sleeve: Fixed Income continues to experience volatility as markets anticipate how many Fed cuts, we can expect in 2025. In the aftermath of significant inflation and a historically fast rate hiking cycle, fixed income has proven to be a helpful defensive ballast in portfolios during the tariff environment we’ve been experiencing the last few weeks. However, potential risks within credit markets and rate volatility remain. We will continue to rely on active managers to help navigate a changing rate and credit environment.
Alternatives Sleeve: To further diversify the fixed income portion of portfolios, we use a blend of diversified, balanced, and active managers designed to help navigate choppy markets. This strategy is meant to complement, not replace traditional fixed income as we aim to produce meaningful real returns while maintaining the primary focus of fixed income which is diversification from stock volatility. Included in this sleeve are strategies that use options to either reduce portfolio volatility, generate income, or both.
Securities and advisory services offered through LPL Financial, a registered investment advisor, Member FINRA/SIPC
The commentary in this report is not a complete analysis of every material fact in respect to any company, industry, or security. The opinions expressed here are not investment recommendations, but rather opinions that reflect the judgment of Horizon as of the date of the report and are subject to change without notice. Forward-looking statements cannot be guaranteed. We do not intend and will not endeavor to provide notice if or when our opinions or actions change. This document does not constitute an offer to sell or a solicitation of an offer to buy any security or product and may not be relied upon in connection with the purchase or sale of any security or device.
Equity markets are represented by the S&P 500 Index. The S&P 500 is a market-capitalization-weighted index of the 500 largest U.S. publicly traded companies. The MSCI All Country World Index (ACWI) is a global equity index that tracks the performance of large- and mid-cap stocks in developed and emerging markets. The Bloomberg U.S. Aggregate Bond Index is a broad-based benchmark that measures the investment grade U.S. dollar-denominated, fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, mortgage-backed securities, asset-backed securities and collateralized mortgage-backed securities. References to indices, or other measures of relative market performance over a specified period of time are provided for informational purposes only. Reference to an index does not imply that any account will achieve returns, volatility, or other results similar to that index. The composition of an index may not reflect the manner in which a portfolio is constructed in relation to expected or achieved returns, portfolio guidelines, restrictions, sectors, correlations, concentrations, volatility or tracking error targets, all of which are subject to change. Indices are unmanaged and do not have fees or expense charges, both of which would lower returns. It is not possible to invest directly in an unmanaged index.
This commentary is based on public information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied on as such.
Horizon Investments and the Horizon H are registered trademarks of Horizon Investments, LLC.
© 2025 Horizon Investments
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