Key Points

• The sweeping tariffs announced by President Trump on April 2^nd roiled global markets and are accelerating the volatility seen over the last seven weeks given the expected impact to U.S. and global growth.
• The negative sentiment that permeated the markets in February and early March abated for a brief period before accelerating into the end of the March and the beginning of April.  Nasdaq US Large Cap Index^TM (NQUSL™) continued to underperform international benchmarks in March amidst U.S. trade tariff uncertainties and their potential impact on economic and corporate earnings growth.
• The Federal Reserve reduced its 2025 median real GDP forecast while raising its core inflation outlook, and U.S. consumer and business sentiment indicators have weakened. Downside risks have intensified in the near-term following the U.S. tariff announcement and given the possible tariff retaliations globally. U.S. high yield corporate bond spreads have moved higher—suggesting an increasingly cautious corporate landscape—yet Nasdaq-100® (NDX®) earnings growth estimates are little changed, for now.
• Performance across Nasdaq’s suite of indexes finished mostly negative for March. Nearly nine out of ten indexes tracked in our report experienced losses, with the average index down -4.7%. The rare bright spot was in metals where Gold/Silver and Copper miner indexes posted positive returns.

Charts of the Month
 

Source: Factset. As of 4/3/25

Source: Bloomberg. As of 4/3/25

The 2025 earnings estimate for the Nasdaq-100® (NDX®) had been coming down in the early part of the year but leveled off in February and March, an indication that analysts may be waiting for further clarity around the impact of the trade tariffs on corporate earnings.  High yield corporate bond spreads (10 year) remain relatively tight versus history but are moving sharply higher in the near term suggesting a cautious corporate backdrop. Given the tariff announcement on April 2^nd, there is increased uncertainty about the macro environment and corporate profitability.

Executive Summary

Uncertainties around U.S. and global trade tariff policies and the angst around their potential impact on the U.S. and global economies and corporate sectors further increased in March. President Trump’s administration indicated that it was willing to risk absorbing sell-offs in equity markets ahead of its April 2^nd tariff announcement where more details emerged. This propelled equity volatility, as measured by the CBOE Nasdaq-100 Volatility Index (VXN), above its five-year average as the Nasdaq-100® (NDX®) fell into correction territory from its highs on February 19, 2025—with Nasdaq-100 Mega^TM (NDXMEGA™) breaching bear market territory relative to its high on December 16, 2024. The ongoing weakness in the mega-cap tech space—exacerbated by stretched positioning and very elevated relative valuations—kept U.S. equities as the underperforming region year-to-date, though the likes of European equities have given back much of their year-to-date gains. It remains to be seen if this pivot away from U.S. large-cap growth equities is more of a tactical, shorter-term unwind or the beginning of a more structural shift away from what has driven U.S. equity markets for the last 15 years. Elsewhere, the risk-off tone was also evident in the Treasury market.  The U.S. Treasury 10-year less 2-year yield curve steepened to over 30 basis points with the front-end moving lower before the spread dropped to less than 20bps in early April as the 10 -year yield fell to 3.9%. Financial markets are now pricing in 4.5 rate cuts by the end of 2025 by the Federal Reserve versus less than two in early February—though the impact on inflation from higher import tariffs remains to be seen. Spot gold prices also hit all-time highs on account of the uncertainties and volatility, and amidst the broader U.S. dollar sell-off which accelerated following April 2^nd.  

As discussed in the February 2025 Monthly Index Scorecard, consumer and business confidence (e.g., University of Michigan Consumer Sentiment, NFIB Small Business Optimism) have deteriorated. At its latest meeting in mid-March, while it waits for greater clarity around the economy’s trajectory, the Federal Reserve acknowledged the weaker survey data and also reduced its median 2025 real GDP forecast to 1.7% from 2.1%. Concurrently, Fed members raised their core inflation forecast to 2.8% from 2.5% for 2025 on account of the potential feed through from the trade tariffs—pointing to a “stagflation” outlook. Year-to-date U.S. equity performance, U.S. sentiment indicators, and increased equity volatility have reflected an increasingly cautious and risk-off tilt as the markets have been driven by policy developments. While recession risks have certainly increased given the uncertainties around U.S. growth, an economic contraction is still not the base case for the markets. This speaks to 1) the strong starting point of the U.S. economy entering 2025, 2) a still solid U.S. labor market and steady U.S. consumer, and 3) the overall health of the U.S. corporate landscape. But, again, the economic outlook changed significantly in early April and the headwinds for the U.S. corporate and consumer landscape have clearly intensified in the near-term. 

Note: the above commentary is as of 4/3/25

Nasdaq Indexes March 2025 Performance Recap

Among the 122 indexes tracked in this report, 108 finished March in negative territory, while 14 ended with positive returns. The best-performing index was PHLX Gold/Silver Sector^TM (XAU™), delivering a return of 14.0%.  The worst performance was from Nasdaq Ethereum (NQETHS™) which lost –17.4% for the month.  The average return across all 122 indexes for the month was –4.7%.

Nasdaq Featured Indexes

All 13 Nasdaq Featured Indexes registered negative returns in March, a continuation from February when 11 indexes finished in negative territory. The Nasdaq-100 Low-Volatility™ (NDXLV™) was the top performer, registering a negative return of -1% while the Nasdaq Innovators Completion Cap™ (NCX™) was the bottom performer, recording a decline of –12.3%. The relative underperformance of mega cap stocks, particularly in the semiconductor names, weighed on the Nasdaq-100® (NDX®) as it was down –7.7%. The Nasdaq-100 Equal-Weighted™ (NDXE™) fared slightly better as it was down –6.3% and outperformed for the third consecutive month; 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 –7.5%.

Nasdaq Global Indexes

The performance for the indexes in the Nasdaq Global Indexes suite was mixed with modestly negative returns in  Nasdaq Europe™ (NQEU™) and Nasdaq DM Ex United States™ (NQDMXUS™). Nasdaq Emerging Markets™ (NQEM™) was the best performer, registering returns of 0.3%.   The group's laggard was Nasdaq US Small Cap™ (NQUSS™), registering a return of –7.2%. This index came under pressure as the Fed’s downgrade of its 2025 GDP growth weighed on small cap names which are traditionally more sensitive to economic growth.

Nasdaq Sector-Specific Indexes

Within Nasdaq’s sector-specific indexes, PHLX Gold/Silver™ (XAU™) was the top performer, registering positive returns of 14%, as the spot gold price hit another all-time high due to its role as a safe-haven asset and an inflation hedge.  The KBW Property & Casualty™ (KPX™) also posted a positive return of 4% on continued enthusiasm for their ability to raise rates in the wake of the Los Angeles fires in January. KBW Nasdaq Bank™ (BKX™) was the laggard in the group, down –9.5%.

Nasdaq Thematic Indexes 

Overall performance across the Nasdaq Thematic Tech lineup was the worst performing suite across the Nasdaq lineup in March with all 25 indexes in the suite recording losses, averaging –7.7%. AI and cloud computing continued to come under pressure as ISE CTA Cloud Computing™ (CPQ™)was the worst performer, registering a loss of –13.1%. This was followed by BVP Nasdaq Emerging Cloud™ (EMCLOUD™) which had a loss of –11.4%. The best performing index in the group was Nasdaq CTA Global Video Games and ESports™ (PLAYER™) with a return of –3.7%.

All but two indexes in the Nasdaq Thematic Renewables and Energy Transition Materials suite posted losses this month, with an average return of –2.7%. This continued the trend of the previous month when nine of the indexes were negative and the suite registered an average return of –4.4%. The standout in the group was Nasdaq Sprott Junior Copper Miners™ (NSCOPJ™), the top performer with a gain of 7.9%. The Nasdaq Sprott Junior Uranium Miners™ (NSURNJ™) was the worst performer, registering a loss of –8.6%.

The Nasdaq Crypto Index suite had an average loss of –6.9%. Nasdaq Ethereum™ (NQETHS™) was the worst performer, seeing a loss of –17.4%.  The other 3 indices in the group had more modest losses ranging from Nasdaq Bitcoin™ (NQBTCS™) at –1.9% to Nasdaq Crypto™ (NCIS™) at –4.5%. 

Nasdaq Quantitative Indexes

Across the index suites comprising Nasdaq’s quantitative offerings, performance was negative with 43 out of the 52 indexes seeing losses in March. Almost half of the indexes in the Nasdaq Options & Other Quantitative suite saw losses, and all 11 Nasdaq Multifactor indexes were negative this month.

Credit Suisse Nasdaq Silver FLOWS106 TR™ (QSLVOTR™) was the top performer across all quant indexes with a return of 8.7%. 

Within the Dorsey Wright suite, Dorsey Wright Consumer Cyclicals Tech Leaders™ (DWCC™) was the worst performer, losing –12.1%.  Dorsey Wright International Focus Five™ (DWANQIFF™) was the top performer in the Nasdaq Dorsey Wright suite, registering a positive return of 1%.

11 of the 15 indexes in the Nasdaq Dividend and Income suite posted losses this month, with an average decline of –2%. Nasdaq Emerging Markets High Equity Income™ (NQEMHEI™) was the top performer, posting a return of 3.8%. The worst performer in the group was Nasdaq Technology Dividend™ (NQ96DIVUS™), down –7.1%. 

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