Chicago, IL – February 25, 2025 – Today, Zacks Investment Ideas feature highlights Apple AAPL, Alphabet GOOGL, Microsoft MSFT, Alibaba BABA and Nvidia NVDA.
After stocks plunged Friday and the Nasdaq gave up its year-to-date gates, investors may wonder whether or not the US equity bull market is at risk. Below are key reasons the selling may have been overdone and the bull market remains fully intact:
On Wall Street, seasonality is the study of how stocks historically perform during specific times of the year. Like a farmer who must seek to plant crops during periods when the climate allows, investors use historical data to give them an additional edge when investing. More sophisticated stock analysts also account for other factors to make the data and the odds more accurate.
For example, the end of February in a post-election year (like 2025), tends to be very weak as investors come down from the presidential election euphoria.
Meanwhile, the S&P 500 Index averages multiple drawdowns a year, with the average annual drawdown being ~14.2%. For this reason, investors must understand their time frame, manage risk, and avoid being top-heavy when the market gets stretched.
Finally, Friday’s drop may have been exaggerated by monthly OPEX (options expiration). Price action is often funky during monthly OPEX days as options traders reposition. As I mentioned in my Tech Innovators service, the Friday of February OPEX was lower in 14 of the past 24 instances. With OPEX shenanigans out of the way, stocks may be able to stabilize.
The impact of Elon Musk’s “Department of Government Efficiency” (DOGE) is another headline on Wall Street that may be causing downward selling pressure. Musk’s team has already offered generous payout packages for government employees and ended work-from-home policy. However, President Trump urged Musk last week to be more aggressive in shrinking the government. In recent years The government job market has become a larger slice of the overall job market. The recent cuts have already taken a toll on the Washington DC housing market, but some investors believe it may impact the overall jobs market.
Fortunately, there is a historical precedent for such a situation. Carson Group Market Strategist Ryan Detrick points out, “During the President Obama budget cuts of 2011-2014 a total of 146k federal jobs were cut. The economy still grew by more than 8 million jobs.”
In other words, DOGE fears are likely overblown.
With the major indices all within 5% of all-time highs, sentiment measures like the CNN Fear and Greed Index show that investors are skittish. The CNN Fear Greed Index flashed a “Fear” reading money morning.
AI and technology stocks have led the market higher, so naturally, investors are concerned about a slowdown in AI spending. Just this morning, Apple announced plans to spend more than $500 billion to accelerate its AI investments. Apple also announced plans to integrate Alphabet’s Gemini AI into Apple intelligence. Meanwhile, a rumor shook stocks this morning as a report emerged stating that Microsoft would slow down AI spending and cancel current orders. However, a Jeffries report “strongly refutes” any changes to MSFT’s AI strategy.
Meanwhile, Chinese AI spending is soaring. Alibaba announced plans to invest $53 billion in cloud and AI infrastructure over the next three years. Regardless of their point of view, investors will get more information about AI spending when AI leader Nvidia reports earnings on Wednesday after the close.
Since 2000, our top stock-picking strategies have blown away the S&P's +7.7% average gain per year. Amazingly, they soared with average gains of +48.4%, +50.2% and +56.7% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
support@zacks.com
https://www.zacks.com
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Apple Inc. (AAPL) : Free Stock Analysis Report
Microsoft Corporation (MSFT) : Free Stock Analysis Report
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
Alphabet Inc. (GOOGL) : Free Stock Analysis Report
Alibaba Group Holding Limited (BABA) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
免责声明：投资有风险，本文并非投资建议，以上内容不应被视为任何金融产品的购买或出售要约、建议或邀请，作者或其他用户的任何相关讨论、评论或帖子也不应被视为此类内容。本文仅供一般参考，不考虑您的个人投资目标、财务状况或需求。TTM对信息的准确性和完整性不承担任何责任或保证，投资者应自行研究并在投资前寻求专业建议。