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Invesco QQQ ETF (QQQ) ended its streak of positive quarterly total return performance of five consecutive quarters as the fund declined by 8.11% for the quarter (on an NAV basis, 12/31/2024 – 03/31/2025). QQQ underperformed the S&P 500’s total return of -4.28% by 3.84% but outperformed the Russell 1000 Growth® Index’s -9.97% return by 1.86%. Despite the negative performance, seven of the ten sectors (per Industry Classification Benchmark- ICB), out of the ten that QQQ has exposure to, finished in positive territory for the quarter. In aggregate these sectors represented an average of ~16.7% of fund weight. Three sectors-(Consumer Discretionary, Industrials and Technology), averaged more than 83% of the weight in QQQ in aggregate for the quarter.
QQQ’s overweight exposure to the Technology sector and lack of exposure to the Financials sector (per Industry Classification Benchmark- ICB) were the largest detractors to relative performance against the S&P 500® Index. For the quarter, the Technology sector averaged a 58.71% weighting in QQQ (vs. a 36.30% weighting in the S&P 500) and traded lower by 11.76% (vs. a decline of 12.66% in the S&P 500). All ICB industry subsectors within technology experienced negative performance for the first quarter of the year, with semiconductors the hardest hit down 17.53%. During Q1, the Financials sector averaged a 10.89% weighting in the S&P 500 Index and no weighting in the S&P 500 Index. The sector advanced by 3.77% within the S&P 500 Index.
The second and third largest individual contributors to QQQ’s absolute performance for Q1 were Gilead Sciences and Amgen, both Health Care stocks. Both companies also enjoyed their best performance day of the quarter following the release of their respective Q4 earnings reports. Amgen started 2025 after a challenging three and a half months to close out 2024. From September 20, 2024, through December 31, 2024, shares declined by over 22% but enjoyed a rebound in Q1 2025, particularly driven by the 6.50% gain the stock experienced in the session (February 5th) immediately following its earnings release on February 4th. Amgen reported comparable earnings per share of $5.31, which beat the average analyst estimate by nearly 4.6%. The earnings figure represented year-over-year growth of nearly 13%. Revenue of ~$9.09 billion surprised analyst expectations by 2.3% and represented year-over-year growth of 10.9%. The company saw upside revenue surprises across a number of its key drug franchises and painted an optimistic picture when providing full-year revenue guidance. Amgen expects to see revenue of $34.3 billion - $35.7 billion, with the midpoint surpassing the average analyst estimate of $34.62 billion. Gilead saw its shares jump by 7.46% on February 12th after it reported results that surpassed analysts’ forecasts the night before. Q4 comparable earnings per share (EPS) was reported at $1.90, surprising the average analyst estimate by over 11% and represented year-over-year growth of over 10%.2 Revenue of $7.57 billion beat estimates by over 6% and represented year-over-year growth of over 6%. Gilead also saw solid revenue beats from some of its key drug franchises including a 21% upside surprise in Biktarvy sales which were reported at nearly $3.8 billion. Full-year EPS guidance of $7.70 - $8.10 was better than analysts’ projections at $7.54 while revenue guidance of $28.2 billion - $28.6 billion beat expectations of $28.07 billion. The stock has experienced a decidedly different trajectory when compared to Amgen and over the past year (03/31/2024 – 03/31/2025) has seen a total return of 58.65%.
Another positive contributor to performance was Netflix, which saw a 4.62% gain for Q1. Netflix announced Q4 earnings on January 21 and beat EPS and revenue estimates. Revenue was reported at ~$10.25 billion, better than analysts’ estimates of ~$10.11 billion. The revenue figure represents 16% year-over-year growth. Earnings per share came in at $4.27, 2% better than the average analyst expectation of $4.18, and represents 102% growth on a year-over-year basis. Subscriber growth was a huge bright spot, as the digital entertainment giant, announced that they added 18.9 million new subscribers in the quarter, the largest subscriber gain in its history and more than double analyst expectations. The company also announced price hikes across a number of markets, including the US. Netflix 2025 revenue guidance was announced at $43.5 – 44.5 billion, higher than its earlier forecast and better than estimates. Shares of Netflix surged by 9.69% in the session immediately following the announcement.
Technology names, particularly semiconductors, were under considerable pressure during the quarter. In late January, the release of Chinese startup DeepSeek’s most recent models caused a ripple effect across Artificial Intelligence (AI)-related stocks. One week after the release, DeepSeek’s AI Assistant rose to the top of Apple’s AppStore, replacing ChatGPT. Reports swirled that training costs for one of the models was below $6 million. Many noted that the models are comparable with (or have even surpassed) some of the most advanced models in the market like ChatGPT or Llama. This caused widespread selloffs across US stocks, as investors extrapolated that there is a risk of significantly lower spending on semiconductors and data center buildouts. In reaction, we saw some notable decliners for the last week of the month. Some of the largest decliners within QQQ over this period included NVIDIA (-15.81%), Micron (11.58%), Broadcom (-9.57%), Marvell Technology (-9.00%), Cadence Design (- 7.13%), Intel (-6.72%) and Microsoft -6.53%.
During the last week of the quarter, semiconductors again came under considerable pressure. From March 25 – March 31, the industry group (according to ICB) was lower by 9.18%, underperforming both the technology sector (-6.92%) and QQQ (-4.96%). Worries stemmed from reports that Microsoft has canceled or deferred leases for data center projects in Europe and the US. Concerns around the growth of data center buildout swirled and whether the large investments that have been announced represent a potential oversupply vs. AI demand. Microsoft reaffirmed its previous forecast of $80 billion in data center spend is on track for its fiscal year and referenced that the company is on track to meet consumer demand after it added more capacity last year than any other year in its history. The company added “While we may strategically pace or adjust our infrastructure in some areas, we will continue to grow strongly in all regions. This allows us to invest and allocate resources to growth areas for our future.” It was reported that Alphabet and Meta picked up some of the leases that Microsoft canceled. Notable decliners for the period included Marvell Technology (-14.09%), ARM Holdings (-14.07%), Advanced Micro Devices (-10.51%), NVIDIA (-10.20%), ON Semiconductors (-10.20%) and NXP Semiconductors (-10.06%) all lower by over 10%.
The best-performing stocks in QQQ for Q1 were Exelon Corp. (+23.55%), Gilead Sciences Inc. (+22.17%) and PDD Holdings Inc. (+22.02%). The worst performers for the quarter were The Trade Desk Inc. (-53.44%), Marvell Technology Inc. (-44.23%) and Tesla Inc. (-35.83%).
Source: Bloomberg L.P., as of 03/31/2025.
Note: All periods represent calendar years. Click for standardized performance. Performance data quoted represents past performance, which is not a guarantee of future results; current performance may be higher or lower than performance quoted. Investment returns, and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. See invesco.com to find the most recent month-end performance numbers. Market returns are based on the midpoint of the bid/ask spread at 4 p.m. ET and do not represent the returns an investor would receive if shares were traded at other times. An investor cannot invest directly in an index. Index returns do not represent Fund returns.
Shortly after President Donald Trump was sworn into office in January, headlines and investors’ attention have been dominated by tariffs. Months of speculation and slowly released details across the first three months of the year, culminated in “Liberation Day.” As the second quarter kicked off, widespread tariffs were announced on April 2 that will affect trade with nearly 100 countries.
Inflation readings that were released in the first months of followed a similar trajectory to the Q4 readings. Consumer Price Index (CPI) reports for December (released in January) and January (released in February) showed continued price acceleration with year-over-year readings of 2.9% and 3.0%, respectively.3 The 3.0% level from the January observation period was the first time that year-over-year CPI growth was a 3.0% or higher since the June 2024 report. The Producer Price Index (PPI) also showed acceleration in the first two months of the year, with a 3.3% initial reading for December (released in January) and a 3.5% measure for January (released in February).4 In mid-March the market received positive reports on the inflation front. The February CPI reading dipped back below the 3.0% thresholding, coming in at 2.8%. The year-over-year Core CPI reading (which strips out the more volatile food and energy components was reported at 3.1%. That reading represents the slowest year-over-year growth in the reading since April 2021 which saw 3.0% growth on a year-over-year basis. PPI year-over-year growth also slowed with the headline number at 3.2% and the core reading at 3.4%. Both readings showed slower price expansion vs. the previous two months releases and were better than the median economist forecasts. The largest surprises in the PPI report came from the month-over-month figures for both the headline and core readings. The headline PPI showed 0.0% growth for February, better than the January revised month-over-month growth of 0.6% and besting economists’ expectations for a 0.3% print. The core PPI was an even greater surprise at -0.1%, the first contraction in the month-over-month reading since July 2024. The February contraction was much lower than the revised January 0.5% print and the median economist estimate for 0.3% growth.
Over the course of the first quarter, the Federal Open Market Committee (FOMC) met twice, in January and March.5 During both meetings the Federal Reserve (Fed) elected to keep its target rate steady at 4.25% - 4.50%. The March meeting did bring a wave of changes in economic projections from the Fed. The central bank cut its 2025 Gross Domestic Product (GDP) forecast by 0.4%, to 1.7% growth vs. the previous forecast of 2.1% in December.6 Additionally, the forecast for inflation was raised by 0.3%, from a previous forecast of 2.5% up to 2.8% for 2025. In the statement, the FOMC noted that “uncertainty around the economic outlook has increased.” In his press conference Fed Chairman Jerome Powell expanded on this notion by stating that inflation has started to move higher with at least partial responsibility being caused by tariffs. They have the potential to delay further progress against price increases as the year goes on. Despite the concerns on the upward pressure that tariffs can cause on prices, the Fed’s dot plot shows that FOMC participants still expect two rate cuts this year.7 Two cuts would bring the target rate down to 3.75% - 4.00%. The Fed also mentioned that it will slow its quantitative tightening program aimed at decreasing the amount of bonds that the central bank holds on its balance sheet. It will allow $5 billion of Treasurys to roll off each month, down from $25 billion.
In talking about the uncertainty that exists in the market, the Fed made mention of staying attentive to risks on both sides of its dual mandate of price stability and maintaining maximum sustainable employment. Over the course of Q1 there were some gauges of the labor market like Nonfarm payrolls and the ADP Employment report that fell short of economists’ expectations.8 Although there were no widespread signs of the labor market rolling over. Initial Jobless claims, reported every week, did not show a sustained increase over the course of the quarter which would indicate rising layoffs and a rolling over of the labor market. The weekly readings did not surpass 245K in any given week. Readings under 300K indicate a strengthening labor market while those over 300K indicate a deteriorating job market. Claims have been firmly under that 300K threshold since late 2021.
Source: Bloomberg L.P., as of 03/31/2025
Following the tariff announcements on April 2, investors’ attention has been firmly fixed on the White House. Tariff impact hasn’t necessarily flowed through to price gauges, so the extent of their upward pressure on prices hasn’t necessarily been measured. The worry is a reacceleration of inflation as tariffs make imported goods more expensive, and companies pass those higher costs onto the consumer. At present, President Trump’s plan is to address the deficit and bring investment into the country through manufacturing (“nearshoring”), but that plan is, by definition, long term. For the immediate future, we have seen increased volatility and downward pressure on stocks. Economic gauges that measure prices (CPI, PPI, Personal Consumption Expenditure) will be watched very closely.9 With that, the market will look to the Fed’s response to any increase in prices and whether or not that will prompt a change in strategy or revised economic projections. The Federal Reserve is scheduled to hold two meetings over the course of Q2- in May and June. We will see an update release of the Summary of Economic Projections during the June meeting, which should give insight into the early effects of tariffs on the economy.
Earnings releases for QQQ companies are always important metrics to watch. Perhaps more than usual, expect this quarter’s earnings reports to be highly scrutinized. We will see many of the QQQ heavyweights release calendar Q1 earnings during the last week of April into the first week of May. The attention is warranted, as a number of these companies are viewed as bellwethers in their respective sectors/industries and collectively serve as a barometer for growth investing. Period earnings per share and revenue figures are important, but market price performance will probably be heavily influenced by any forward guidance or outlook that is released. Since tariffs were not widely enacted for the whole quarter, it may be challenging to try and glean any information on tariff impact from individual company’s quarterly results. Much attention will be placed on commentary around forward guidance and earnings calls will likely be full of questions around future outlook and specific tariff effects on business lines. At present (April 2025), full-year Nasdaq 100 earnings growth projections stand at nearly 22% growth for 2025, and over 15% growth for full-year 2026. We continue to see numbers that represent a fundamental growth rebound from FY 2022 and 2023, where Nasdaq 100 earnings grew at mid-single digits and healthy fundamental growth will likely be one of positive drivers for Nasdaq 100 companies.
The Industry Classification Benchmark (ICB) is a system for assigning all public companies to appropriate subsectors of specific industries.
Earnings per share is the monetary value of earnings per outstanding share of common stock for a company.
The Consumer Price Index (CPI) measures the average change in prices over time that consumers pay for goods and services.
The Producer Price Index measures the average change over time in selling prices received by domestic producers of goods and services.
The Federal Open Market Committee (FOMC) is a 12-member committee of the Federal Reserve Board that meets regularly to set monetary policy, including the interest rates that are charged to banks.
GDP measures the monetary value of final goods and services produced in a country in a given period of time.
The Federal Reserve’s “dot plot” is a chart that the central bank uses to illustrate its outlook for the path of interest rates.
Nonfarm payroll refers to the number of jobs in the private sector and government agencies.
The Personal Consumption Expenditures Price Index is a measure of the prices that people living in the United States, or those buying on their behalf, pay for goods and services.
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Digital assets, such as cryptocurrency and blockchain, are becoming a major industry. In this guide, we provide investors insight into the asset class.
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All data is from Bloomberg, L.P. as of 03/31/2025, unless otherwise noted.
All returns are based off NAV. Returns are cumulative unless otherwise noted.
Holdings are subject to change and are not buy/sell recommendations.
The Nasdaq-100® Index comprises the 100 largest non-financial companies traded on the Nasdaq.
Holdings are subject to change and are not buy/sell recommendations.
These comments should not be construed as recommendations. Forward-looking statements are not guarantees of future results. They involve risks, uncertainties and assumptions; there can be no assurance that actual results will not differ materially from expectations.
The opinions expressed are those of the author, are based on current market conditions and are subject to change without notice. These opinions may differ from those of other Invesco investment professionals.