Key Points

• U.S. large cap equities underperformed throughout most of February while developed international markets (tracked by the Nasdaq DM Ex United States™ Index (NQDMXUS™) have established a clear leadership position YTD, with Europe outperforming (tracked by the Nasdaq Europe™ Index (NQEU™).
• Q4 2024 earnings for the Nasdaq U.S. Large Cap™ Index (NQUSL™) show 76% of companies meet or beat EPS estimates as the current reporting period winds down, and a blended EPS growth rate of over ~20%. Nasdaq-100® (NDX®) companies have been outperforming, with 82% in-line or beating estimates and blended EPS growth of ~24%.
• Performance across Nasdaq’s suite of indexes finished mostly negative for February. More than three out of four indexes tracked in our report experienced losses, with the average index down -2.8%. The notable exception to the generally negative performance was the Nasdaq Dividend and Income suite where 8 out of the 15 indexes were positive for the month and the group had an average return of 0.1%.

Executive Summary

While the fundamental narrative for U.S. equities remains in place for 2025—e.g., mega-cap tech and other AI-related names to continue to benefit from the AI tailwinds; broadening of earnings growth; potential for fiscal policies to further bolster economic growth—we have seen some headwinds as concerns over stubborn inflation and its implication for interest rate cuts, the impact of tariffs and geo-political uncertainties, and valuation have taken some of the wind out of the U.S. market. Indeed, the earnings report by Nvidia (NVDA) highlighting strong growth and a positive outlook failed to convince investors that its valuation is warranted, and we saw NVDA trade down by over 8% the next day.  The leading equity market performance YTD has come from outside of the U.S. Notably, European equities are higher by 10% YTD given the level of negative sentiment priced into the region (e.g., European 12-month forward price to earnings entered the year at ~40% discount vs. the U.S.); the prospect of a de-escalation in the Ukraine war, and the European Central Bank having room to cut rates further given weak growth and lower inflation. While structural headwinds continue to face European equities and uncertainties will persist around the potential for U.S. trade tariffs, in the interim, investors are searching for those unloved and underperforming equities—particularly given the still rich valuations of U.S. equities. Likewise, Chinese equities have started off very strong in 2025 as the Nasdaq Golden Dragon China™ Index (HXC™) is higher by over 13% YTD. Similar to European equities, Chinese equities entered the year trading at a notable discount amid tailwinds from the large fiscal and monetary stimulus announced last Fall as well as President Xi’s recent supportive stance for the private sector. Chinese technology equities have rallied sharply following the news at the end of January that Chinese AI start-up DeepSeek developed an AI model which rivals the most prominent U.S. models. Again, while skepticism persists around the DeepSeek claims, the Nasdaq Golden Dragon China Index jumped 8.8% in February on the prospects that this potential breakthrough could lead to Chinese tech firms capturing a substantial slice of the global AI spending pie.

On the macro front, concerns regarding fiscal policy, especially tariffs, have seeped into corporate and consumer confidence recently. For instance, the NFIB’s Small Business Uncertainty Index rose to its third highest reading in data going back to 1986. On the consumer front, tariff concerns likely weighed on the University of Michigan Consumer Sentiment report as consumer confidence fell to a seven-month low while one-year consumer inflation expectations rose by 1% to 4.3%, a 15-month high. While the U.S. economic outlook has remained stable since last summer’s growth scare, investors are now closely monitoring for signs that trade tariffs and/or other policies could disrupt corporate capital expenditure plans or consumer demand; indeed, one of the more widely followed GDP trackers from the Atlanta Fed is already showing a reversal in forecasted Q1 2025 GDP from robust expansion to outright contraction. As market proxies for potential U.S. headwinds, U.S. Treasury 10-year yields fell from nearly 4.80% in mid-January—highest since November 2023—to approximately 4.15% and the broad-based USD index has fallen from its highest level in more than two years.

Nasdaq Indexes February 2025 Performance Recap

Among the 122 indexes tracked in this report, 92 finished February in negative territory, while 30 ended with positive returns. The best-performing index was Nasdaq International BuyBack Achievers™ (DRBXUS™), delivering a return of 6.8%.  The worst performance was from Nasdaq Ethereum™ (NQETHS™) which lost –33.3% for the month.  The average return across all 122 indexes for the month was –2.8%.

Nasdaq Featured Indexes

11 of the 13 Nasdaq Featured Indexes registered negative returns in February, a reversal from January when only one index finished in negative territory. The Nasdaq-100 Low-Volatility™ (NDXLV™) was the top performer, registering positive returns of 4.2% while the Nasdaq Innovators Completion Cap™ (NCX™) was the bottom performer, recording a decline of –7.7%. The market’s negative reaction to the NDVA earnings guidance weighed on the Nasdaq-100® as it was down -2.8%. The Nasdaq-100 Equal-Weighted™ (NDXE™) fared better as it was down –1.3% and outperformed for the second consecutive month, to a large extent due to those steep declines in Nvidia; a similar dynamic enabled Nasdaq-100 ex Top 30™ (NDX70™) to outperform Nasdaq-100 Top 30™ (NDX30™). Overall, this group of indexes was down an average of -3%.

Nasdaq Global Indexes

The performance for the indexes in the Nasdaq Global Indexes suite was mixed with positive returns in  Nasdaq Europe™ (NQEU™), Nasdaq DM Ex United States™ (NQDMXUS™), and Nasdaq Emerging Markets™ (NQEM™).   Nasdaq Europe™ (NQEU™) was the best performer, registering returns of 3.2%, as European markets shrugged off tariff fears stirred by recent announcements from President Trump. Additionally, investors reacted positively to the prospect of a resolution to the Russia-Ukraine conflict. The group's laggard was Nasdaq US Small Cap™ (NQUSS™), registering a return of –5.5%. This index came under pressure as recent upside surprises in inflation readings led to concerns about the Fed’s willingness to further cut interest rates in 2025.

Nasdaq Sector-Specific Indexes

Within Nasdaq’s sector-specific indexes, KBW Property & Casualty™ (KPX™) was the top performer, registering positive returns of 5.5%, due to renewed enthusiasm for their ability to raise rates in the wake of the Los Angeles fires in January.  The Nasdaq KBW Financial Sector Dividend Yield™ (KDX™) also posted a positive return of 2.5%.  The KBW Regional Banking™ (KRX™) was the laggard in the group, down -3.6%.

Nasdaq Thematic Indexes

Overall performance across the Nasdaq Thematic Tech lineup was broadly negative in February with 21 out of the 25 indexes in the suite recording losses, averaging –2.9%. The BVP Nasdaq Emerging Cloud™ (EMCLOUD™) was the worst performer, registering a loss of –9.9%. AI and cloud computing came under pressure with the Nasdaq CTA Artificial Intelligence™ (NQINTEL™) and ISE CTA Cloud Computing™ (CPQ™) posting losses of –8.2% and –8.3% respectively. The best performing index in the group was Nasdaq CTA Global Video Games and ESports™ (PLAYER™) with a return of 6.2%.

All but two indexes in the Nasdaq Thematic Renewables and Energy Transition Materials suite posted losses this month, with an average return of –4.4%. This contrasts with the previous month, when the suite of indexes registered average returns of 1.7%. The Nasdaq Sprott Junior Uranium Miners™ (NSURNJ™) was the worst performer, registering a loss of –19.6%. The Nasdaq Sprott Lithium Miners™ (NSLITP™) was the second worst performer, registering a loss of –11.1%.  ISE Clean Edge Global Wind Energy™ (GWE™) was the best performer in the group rising 2.5%.

The Nasdaq Crypto Index suite generated by far the worst performance across the entire Nasdaq lineup, with an average loss of –23% as crypto ETFs overall experienced net outflows in February, the first time that has occurred since April 2024. The cryptocurrency market experienced a significant decline in the month of February after having risen in Q4 2024 following the US presidential election. The price of bitcoin fell by -17.5% in February, marking its largest monthly loss since June 2022.  Nasdaq Ethereum™ (NQETHS™) was the worst performer, seeing a loss of –33.3%.  The other 3 indices in the group had losses ranging from Nasdaq Bitcoin™ (NQBTCS™) at –17.3% to Nasdaq Crypto™ (NCIS™) at -21.6%.

Nasdaq Quantitative Indexes

Across the index suites comprising Nasdaq’s quantitative offerings, performance was decidedly negative with 37 out of the 52 indexes seeing losses in February. All the indexes in the Nasdaq Options & Other Quantitative suite saw losses, and 8 out of the 11 Nasdaq Multifactor indexes were negative this month.

The Dorsey Wright Technology Tech Leaders™ (DWTY™) was the worst performer in the group, losing –9.2%.  Dorsey Wright Utilities Tech Leaders™ (DWUT™) was the top performer in the Nasdaq Dorsey Wright suite, registering positive returns of 2.6%.

More than half of the 15 indexes in the Nasdaq Dividend and Income suite posted gains this month, with an average gain of 0.1%, bucking the negative trend across most other index suites. The Nasdaq International BuyBack Achievers™ (NQDRBXUS™) was the top performer.  The worst performer in the group was Nasdaq US SMID Rising Dividend Achievers™ (NQDVSMR™), down –5.2%.

Disclaimer:

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