社区

Nasdaq plunge have resulted in the index in correction territory .

What’s Driving the Plunge?

The immediate trigger appears to be escalating trade tensions following the Trump administration’s rollout of new tariffs—25% on imports from Canada and Mexico, and doubled duties on Chinese goods—implemented earlier this week. These moves sparked retaliatory threats from affected nations, injecting volatility into an already jittery market. Tech stocks, heavily reliant on global supply chains, took the brunt of the hit. For instance, automakers like Ford and General Motors, with intricate North American operations, dropped 2.9% and 4.6%, respectively, on March 4, while chipmakers like Marvell Technology saw a 17% plunge after a lackluster outlook.

Beyond tariffs, broader concerns are at play. High valuations in the tech sector—fueled by the AI boom of 2023 and 2024—have left little room for error. The Nasdaq 100, a subset of the composite, shed nearly 20% from its mid-December high by early March, exacerbated by disappointing earnings from giants like Amazon, Intel, and Tesla. Add to that a slowing U.S. economic outlook, with the Federal Reserve scaling back rate cut expectations to just two for 2025, and the stage was set for a sharp pullback.

Correction or Something More?

A correction, defined as a 10%+ decline from a recent high, isn’t unusual—historically, the Nasdaq has seen one roughly every 18 months. This one, however, feels amplified by its speed and the uncertainty swirling around U.S. trade policy. The Nasdaq dipped into correction territory during trading on March 4, briefly paring losses, but confirmed its status by March 6, closing at 18,285.16—down 9.3% from its record high. Posts on X reflect the whiplash: some traders see “MACD/RSI divergences” signaling a potential bounce, while others point to tariff fears as a reason to stay cautious.

Yet, this isn’t a bear market (20%+ drop) yet, and fundamentals suggest it might not get there. The U.S. economy, while cooling, isn’t in recession territory—labor markets remain resilient, and inflation, though above the Fed’s 2% target, is trending downward. Tech companies, despite the sell-off, still hold strong balance sheets and long-term growth drivers like AI and cloud computing.

The Case for a Buying Opportunity

For long-term investors, corrections often serve as entry points. History backs this up: since 2002, the S&P 500 (a broader proxy) has seen 10% pullbacks in half of all years, with an average decline of 15%, only to recover and hit new highs as dip-buyers step in. The Nasdaq, with its growth tilt, tends to follow a similar pattern. Take Nvidia, a darling of the AI rally—despite volatility, its dominance in AI chips and upcoming Blackwell architecture keep analysts optimistic. Microsoft, too, at a forward P/E of 34.9, offers exposure to AI via Azure at a relatively reasonable valuation compared to Tesla’s lofty 176.

The current dip has brought some valuations closer to earth. Meta, up YTD and trading at a forward P/E of 25.8 with 11% projected earnings growth, looks like a standout. Even Alphabet, down 17% recently, could rebound as ad spending stabilizes. As one X user put it, “Market dips create opportunities. Strong companies, long-term growth, buy the fear, profit on the rebound.”