Nasdaq drops into correction as tariff fears Rattle Tech in Q1
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The Nasdaq Composite entered correction territory in the first quarter of 2025, closing the three-month period with a sharp 10.4% decline. The market rout, driven primarily by escalating concerns over incoming U.S. tariffs under President Donald Trump’s renewed protectionist stance, put sustained pressure on large-cap technology stocks. The sell-off highlights growing investor unease over how cross-border trade disruptions could impact top-line growth and margin resilience across the tech sector.
This quarter’s performance marks a significant reversal in sentiment for a group that has long dominated U.S. equity markets: the so-called Magnificent Seven. In Q1, however, no member of this elite group managed to stay afloat. Meta Platforms fared best among the pack, but still lost 3.8%. Apple shed 9% of its market value despite remaining the largest listed company globally, with a market capitalization of $3.34 trillion. Microsoft followed closely with a 10% loss.
Amazon shares retreated 14% amid concerns about weakening consumer spending and higher input costs linked to global supply chain disruptions. Alphabet, parent company of Google, declined by 18.4% as digital ad growth expectations were revised downward. Nvidia, often considered the bellwether of AI-driven growth, saw its market cap contract by 21.6%, falling to $2.64 trillion by quarter-end. The steepest correction came from Tesla, which plunged 31.7% over the period, driven by investor disillusionment with company leadership and ongoing distractions surrounding CEO Elon Musk’s political involvement.
The technology sector’s dismal performance comes at a pivotal moment. As Q2 begins, the U.S. enters earnings season under the shadow of significant trade policy changes. Market participants remain cautious, especially with Trump’s April 2 deadline approaching, when a sweeping package of reciprocal tariffs is expected to be unveiled. These measures could further depress sentiment in an already fragile equity environment.
Looking ahead, traders and investors should watch for earnings guidance revisions, shifts in global supply chain narratives, and potential central bank responses to deteriorating risk appetite. The Nasdaq’s correction underscores the heightened sensitivity of tech valuations to macroeconomic headwinds and policy shocks, making it essential to approach this phase of the cycle with disciplined risk management and close attention to forward-looking indicators.
This quarter’s performance marks a significant reversal in sentiment for a group that has long dominated U.S. equity markets: the so-called Magnificent Seven. In Q1, however, no member of this elite group managed to stay afloat. Meta Platforms fared best among the pack, but still lost 3.8%. Apple shed 9% of its market value despite remaining the largest listed company globally, with a market capitalization of $3.34 trillion. Microsoft followed closely with a 10% loss.
Amazon shares retreated 14% amid concerns about weakening consumer spending and higher input costs linked to global supply chain disruptions. Alphabet, parent company of Google, declined by 18.4% as digital ad growth expectations were revised downward. Nvidia, often considered the bellwether of AI-driven growth, saw its market cap contract by 21.6%, falling to $2.64 trillion by quarter-end. The steepest correction came from Tesla, which plunged 31.7% over the period, driven by investor disillusionment with company leadership and ongoing distractions surrounding CEO Elon Musk’s political involvement.
The technology sector’s dismal performance comes at a pivotal moment. As Q2 begins, the U.S. enters earnings season under the shadow of significant trade policy changes. Market participants remain cautious, especially with Trump’s April 2 deadline approaching, when a sweeping package of reciprocal tariffs is expected to be unveiled. These measures could further depress sentiment in an already fragile equity environment.
Looking ahead, traders and investors should watch for earnings guidance revisions, shifts in global supply chain narratives, and potential central bank responses to deteriorating risk appetite. The Nasdaq’s correction underscores the heightened sensitivity of tech valuations to macroeconomic headwinds and policy shocks, making it essential to approach this phase of the cycle with disciplined risk management and close attention to forward-looking indicators.