Investors Eye Nasdaq's Potential Recovery Amid Trade Policy Shift

As the Nasdaq Composite enters bear market territory due to trade policy changes, patient investors see a potential rebound. With historical averages suggesting a 21% return post-correction, the Invesco QQQ Trust emerges as a compelling investment choice.

Date: 16-04-2025

AI Rating: 8

The recent report indicates that the Nasdaq Composite has fallen significantly amid changes in U.S. trade policy, placing it in correction and bear market territories. Historically, this scenario has led to a strong recovery, with an average return of 21% in the following year, implying a potential buying opportunity for long-term investors.

The Invesco QQQ Trust, which tracks the Nasdaq-100 index, could be attractive during this time. Notably, its composition is heavily weighted towards the tech sector, particularly the 'Magnificent Seven' stocks, which include industry giants like Apple, Microsoft, and Nvidia. The report highlights that the 'Magnificent Seven' demonstrated outstanding earnings growth of 37% last year, contrasting sharply with the S&P 500's 7% growth. Forecasts also predict a further 17% earnings growth for these leading companies in 2025, which significantly exceeds the 9% expected for the rest of the S&P 500.

Despite the concentration risk associated with the 'Magnificent Seven', their average price-to-earnings ratio being at a cheaper valuation may provide a buffer for investors.

**Earnings Growth Overview**: The strong earnings growth of the top stocks in the Invesco QQQ Trust positively affects future profitability expectations. This aspect is essential for investors to consider, as growing earnings typically correlate with increased stock prices. Furthermore, the relatively low expense ratio of 0.2% for the QQQ Trust compared to the industry average can enhance net returns for investors.

Given all these factors, while the market is potentially volatile due to pending trade policies and economic factors, the long-term outlook based on historical performance and the fundamentals of the Invesco QQQ Trust appears optimistic for professional investors.

Stocks: AAPL MSFT NVDA AMZN GOOGL AVGO META COST NFLX TSLA