Investing

Live Market Updates: Nasdaq Composite Drops Thurday - Where is the QQQ Headed in 2025?

Eric Bleeker

Published: December 26, 2024 11:34 am

Last Updated: December 26, 2024 3:29 pm

Live Updates

As of 10:45 a.m., markets appear headed to break their recent winning streak. The Dow Jones Industrial Average has seen 5 straight days in the green after seeing an incredible 10-day losing streak on December 19th.

Let’s check in on how major indexes are performing today:

• Dow Jones Industrial Average: Down 90.67 (-.21%)
• S&P 500: Down 12.27 (-.20%)
• Nasdaq: Down 33.33 (-.17%)

Here are some of the biggest stories in the market today.

Broadcom Keeps Soaring

Among large companies, the top performer today is Broadcom (Nasdaq: AVGO), which is up 1.7%. While Broadcom is up, other AI-related stocks aren’t faring as well today. NVIDIA (Nasdaq: NVDA) is down .91% and AMD (Nasdaq: AMD) is down .39%.

Looking further the Magnificent 7 space, Tesla (Nasdaq: TSLA) is down .78% after gaining 7.5% on Christmas Eve. Meta Platforms (Nasdaq: META) is down .75%, while Alphabet (Nasdaq: GOOGL) and Amazon (Nasdaq: AAPL) are flat.

S&P 500 Movers

The biggest movers in the S&P 500 today are concentrated in the retail sector. CVS Health (NYSE: CVS) is up 2.6%, Walgreens Boots Alliance (Nasdaq: WBA) is up 2.6%, and Target (NYSE: TGT) is up 2.4%.

All these retailers have struggled recently, but are seeing a rebound today. There’s no clear market news behind the move, but it could be related to data from the Christmas shopping season. Other retailers like Walmart (NYSE: WMT) and Amazon (Nasdaq: AMZN) are down on the day, so we’re mostly seeing gains in a small group of companies rather than sector-wide gains.

How Will the Nasdaq (QQQ) Perform in 2025?

The Nasdaq-100 is currently up 31.6% on the year, another strong performance after the Nasdaq slipped in 2022. On a 5-year basis, the Nasdaq-100 is now up 148%, which significantly outperforms the S&P 500’s 86.2% return.

The primary reason the Nasdaq is outperforming is that the index is heavily weighted to large technology stocks. The Nasdaq-100 has 55% its weighting to just 10 stocks that include Apple, NVIDIA, Microsoft, Amazon, Broadcom, Tesla, Meta Platforms, Alphabet, Costco, and Netflix.

These stocks have generally seen excellent performance in recent years. Let’s at the bull and bear case for the Nasdaq in 2025:

Bull Case

• Magnificent 7 stocks are set up for a strong 2025 driven by growth in major trends like artificial intelligence. While Apple didn’t see an AI-driven ‘iPhone supercycle’ materialize in 2024, there’s a growing belief sales growth will strongly accelerate in 2025. Likewise, stocks like NVIDIA, Microsoft, Amazon, Broadcom, Meta, and Tesla are all seeing strong tailwinds from AI.
• GDP growth in the United States could see its strongest rate in years. Headed into 2023, consensus estimates from economists for U.S. GDP growth stood at .4%, but ended up hitting 2.5%. Then in 2024, economists predicted 1.2% GDP growth and actual growth appears headed for 2.7%. Economists are now predicting 2.1% growth in 2025. If economists have once again underestimated GDP growth, we could see the U.S. economy growing by more than 3% this year.

Bear Case

• The strongest bear case against the Nasdaq is that stocks are simply too expensive. The current P/E of the Nasdaq-100 is 38, which is far above historical averages and where the Nasdaq traded right before its dramatic fall in 2021. This overextended valuation is across stocks, with Costco trading for a P/E of 56,
• Interest rates are another strong bear case against the Nasdaq. In September it looked like rates would be falling across 2024, but the Fed has recently changed its tone and the market now expects two rate cuts in 2025. If higher-than-expected rates cut into profit growth, the Nasdaq could see its lofty P/E ratio finally fall as stocks underperform this year.