NASDAQ 100 tumbles 4% as tech stocks lead market sell-off

David Morrison

SENIOR MARKET ANALYST

11 Mar 2025

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US stock indices slumped yesterday, with tech stocks leading the decline. The NASDAQ ended the session down 4% and near the lows for the day, posting its worst performance since September 2022. The Dow and S&P 500 closed with losses of 2.1% and 2.7% respectively. Both bounced off their session lows in the last hour of trading. The Russell 2000 also ended down 2.7%.

The US majors dropped further in overnight trade before finding support which triggered a bounce into the European open. They were all firmer this morning, with the mid-cap, domestically-focused Russell leading the recovery. Tech gains were more modest. This reflects investor fears that many tech leaders are still seriously overvalued. Tesla was one of yesterday’s big casualties, dropping close to 17%.

As of yesterday’s low, the EV giant had lost 55% of its value since mid-December, giving back all the gains which followed Trump’s election victory in early November. Bond prices soared, and yields fell sharply, as investors sought out safe haven plays. The yield on the key 10-year Treasury Note fell below 4.20%, down from 4.80% less than two months ago. And the market is now pricing in the probability of three or more 25 basis point rate cuts in 2025, up from just one at the start of the year. The reason for all this? Recession fears.

Last week, the Atlanta Fed ‘GDP Now’ was forecasting that first quarter growth would come in at -2.4%, down from +2.3% estimated in mid-February. There are many assumptions that go into this forecast, and many will prove to be overstated. But there’s no doubt about the direction of travel with tariffs, as currently planned, expected to weigh on economic growth.

In an interview on Sunday, President Trump refused to speculate on the likelihood of a recession this year. But he said he expected “a period of transition” for the economy.  This echoed comments from Treasury Secretary Scott Bessent on Friday who suggested there may be a “detox period” for the economy as the administration tackled government spending.

Yesterday’s stock market sell-off followed on from last week’s negative performance. Yet little has really changed. Non-Farm Payrolls were benign, and most economic data points are holding up. Retail Sales were weak, and confidence indicators are a concern. The sell-off could be little more than a long-overdue correction which could reset some overvalued stocks and restore some sanity to the market. But there are dangers.

NASDAQ 100 daily chart showing recent market decline and MACD indicator signals.

Source: TN Trader

As far as potential catalysts for the next move, there’s the CPI tomorrow and PPI on Thursday. Aside from that, President Trump’s tariff threats rumble on, and should continue to influence sentiment. The daily NASDAQ 100 chart is shown above. As you can see, the latest leg of the tech rally began in October 2022, so it’s quite long in the tooth.

The NASDAQ has dropped just under 13% since hitting its all-time high in mid-February. Now, this decline is similar to last year’s sell off between July and August, although that was bigger, coming in at close to 17%. But, looking at the MACD, we’re slightly more oversold now than we were back then. Due for a bounce? Maybe. Can the market head lower from here? Of course! What happens this week could influence market direction for the rest of this month.


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