Nasdaq Leads Gains as Stocks Manage to Eke Out Weekly Gains

The Nasdaq Composite, the tech-heavy index that has been a barometer for the market's risk appetite, managed to eke out gains in the past week, leading the broader market in a volatile trading environment. The index, which has been under pressure due to the rotation away from higher valuation parts of the market, particularly among mega-cap technology stocks, saw a 0.17% gain for the week. This performance was in stark contrast to the broader market, where the S&P 500 and the Dow Jones Industrial Average also managed to post gains, albeit with varying degrees of success.

The Federal Reserve's decision to leave rates unchanged at 4.25%–4.5% during its March monetary policy meeting had a notable impact on investor sentiment and market performance. The Fed's decision was widely expected, but the accompanying projections and statements influenced market behavior significantly. The Fed indicated that it expects 50 basis points (0.5 percentage points) of rate cuts this year, which remained unchanged from a previous projection in December. This projection suggested a cautious approach to monetary policy, aiming to balance economic growth and inflation control. Fed Chair Jerome Powell stated that the Fed’s “base case” is that the impact of tariffs will be transitory and that “most measures of longer-term expectations remain consistent with” the central bank’s 2% inflation target. This dovish tone was generally welcomed by investors, as it indicated a supportive stance towards economic stability.

The market's response to the Fed's decision was positive, with most stock indexes posting solid gains for the day. This positive sentiment was reflected in the performance of major indices. For instance, the S&P 500 and the Nasdaq Composite both experienced gains, with the Nasdaq Composite rising 0.17% for the week. However, the technology-heavy Nasdaq Composite underperformed compared to other indices, such as the Dow Jones Industrial Average, which advanced 1.2%, and the S&P MidCap 400, which posted its first weekly gain since January. This underperformance can be attributed to the ongoing rotation away from higher valuation parts of the market, particularly among mega-cap technology stocks, which have been a significant component of the Nasdaq.

The Fed's projections for the year also included increased expectations for inflation in 2025 while lowering expectations for gross domestic product (GDP) growth. This mixed outlook added to the uncertainty in the market, as investors grappled with the potential impact of higher inflation on future earnings and the slower economic growth on corporate profits. Despite this uncertainty, the overall market sentiment remained relatively positive, with investors focusing on the Fed's dovish stance and the potential for rate cuts later in the year.

The Nasdaq's leading performance in the recent week can be attributed to several specific factors. Firstly, the Nasdaq Composite, which is heavily weighted towards technology stocks, underperformed compared to other indices due to the general underperformance of large-cap tech stocks. This was evident as the Nasdaq Composite was the worst-performing index during the week, with a decline of 7.91% year-to-date. This underperformance was driven by the rotation away from higher valuation parts of the market, particularly among mega-cap technology stocks, which added downward pressure to stock-market returns.

In contrast, the Dow Jones Industrial Average performed best, advancing 1.2%, while the S&P MidCap 400 posted its first weekly gain since January. The S&P 500, which includes a broader range of sectors, also saw a decline of 3.64% year-to-date. The S&P 500 experienced its first 10% pullback since 2023 last week, highlighting the volatility and uncertainty in the market. The technology-heavy Nasdaq has dropped about 14% from peak-to-trough this year, indicating a significant correction in the tech sector.

The underperformance of the Nasdaq can also be attributed to the increased uncertainty around the economic outlook, as noted by the Federal Reserve's post-meeting statement. The Fed's decision to hold its policy rate steady at 4.25%–4.5% and its increased expectations for inflation in 2025 while lowering its expectations for GDP growth contributed to the market's volatility. Additionally, the Fed's note on increased uncertainty around the economic outlook added to the market's jitters, leading to a rotation away from growth stocks, which are heavily represented in the Nasdaq.

In summary, the Nasdaq's underperformance compared to the S&P 500 and Dow Jones can be attributed to the rotation away from higher valuation parts of the market, particularly among mega-cap technology stocks, and the increased uncertainty around the economic outlook. The S&P 500 and Dow Jones, which have a broader range of sectors, were less affected by the tech sector's underperformance and saw gains during the week.

The Nasdaq's leading performance in the recent week can be attributed to several specific factors. Firstly, the Nasdaq Composite, which is heavily weighted towards technology stocks, underperformed compared to other indices due to the general underperformance of large-cap tech stocks. This was evident as the Nasdaq Composite was the worst-performing index during the week, with a decline of 7.91% year-to-date. This underperformance was driven by the rotation away from higher valuation parts of the market, particularly among mega-cap technology stocks, which added downward pressure to stock-market returns.

In contrast, the Dow Jones Industrial Average performed best, advancing 1.2%, while the S&P MidCap 400 posted its first weekly gain since January. The S&P 500, which includes a broader range of sectors, also saw a decline of 3.64% year-to-date. The S&P 500 experienced its first 10% pullback since 2023 last week, highlighting the volatility and uncertainty in the market. The technology-heavy Nasdaq has dropped about 14% from peak-to-trough this year, indicating a significant correction in the tech sector.

The underperformance of the Nasdaq can also be attributed to the increased uncertainty around the economic outlook, as noted by the Federal Reserve's post-meeting statement. The Fed's decision to hold its policy rate steady at 4.25%–4.5% and its increased expectations for inflation in 2025 while lowering its expectations for GDP growth contributed to the market's volatility. Additionally, the Fed's note on increased uncertainty around the economic outlook added to the market's jitters, leading to a rotation away from growth stocks, which are heavily represented in the Nasdaq.

In summary, the Nasdaq's underperformance compared to the S&P 500 and Dow Jones can be attributed to the rotation away from higher valuation parts of the market, particularly among mega-cap technology stocks, and the increased uncertainty around the economic outlook. The S&P 500 and Dow Jones, which have a broader range of sectors, were less affected by the tech sector's underperformance and saw gains during the week.

The Nasdaq's leading performance in the recent week can be attributed to several specific factors. Firstly, the Nasdaq Composite, which is heavily weighted towards technology stocks, underperformed compared to other indices due to the general underperformance of large-cap tech stocks. This was evident as the Nasdaq Composite was the worst-performing index during the week, with a decline of 7.91% year-to-date. This underperformance was driven by the rotation away from higher valuation parts of the market, particularly among mega-cap technology stocks, which added downward pressure to stock-market returns.

In contrast, the Dow Jones Industrial Average performed best, advancing 1.2%, while the S&P MidCap 400 posted its first weekly gain since January. The S&P 500, which includes a broader range of sectors, also saw a decline of 3.64% year-to-date. The S&P 500 experienced its first 10% pullback since 2023 last week, highlighting the volatility and uncertainty in the market. The technology-heavy Nasdaq has dropped about 14% from peak-to-trough this year, indicating a significant correction in the tech sector.

The underperformance of the Nasdaq can also be attributed to the increased uncertainty around the economic outlook, as noted by the Federal Reserve's post-meeting statement. The Fed's decision to hold its policy rate steady at 4.25%–4.5% and its increased expectations for inflation in 2025 while lowering its expectations for GDP growth contributed to the market's volatility. Additionally, the Fed's note on increased uncertainty around the economic outlook added to the market's jitters, leading to a rotation away from growth stocks, which are heavily represented in the Nasdaq.

In summary, the Nasdaq's underperformance compared to the S&P 500 and Dow Jones can be attributed to the rotation away from higher valuation parts of the market, particularly among mega-cap technology stocks, and the increased uncertainty around the economic outlook. The S&P 500 and Dow Jones, which have a broader range of sectors, were less affected by the tech sector's underperformance and saw gains during the week.