While the Nasdaq remains in correction territory, data from Fidelity Investments reveals that the current downturn closely mirrors the 2022 correction. However, this expert notes that the underlying causes differ, with the Magnificent 7 stocks being the common factor driving the index lower.
What Happened: The Nasdaq indices saw one of the quickest corrections in history from the most recent 52-week high scaled on Feb. 19 to a fall of over 10% by March 6, 2025. Similarly, the S&P 500 fell into the correction zone as of March 13, closing after scaling the Feb. 19 high.
According to Jurrien Timmer, the director of global macro at Fidelity Investments, this quick correction in 2025 looked like a “repeat of the 2022 bear cycle.” A chart shared by him, titled “Anatomy of a Correction,” highlighted all the market corrections since 1900.
“At first glance, that seems odd, since 2022 was driven by rising rates and this one is driven by a repricing of the ‘animal spirits’ playbook,” Timmer said.
He explained that the fall of Magnificent 7 stocks led to the similarity between the patterns of the two years. As rising discount rates impacted their long-duration valuations in 2022, the current pause in rate cuts was analogous to the time.
However, he believed apart from this common factor the correction was much more comparable with 2018, “when robust earnings growth was offset by contracting P/E multiples.” Timmer also said that 1998 and 1968 were similar to 2025 in terms of “speed and depth”.
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Why It Matters: As of Wednesday, the Nasdaq 100 remains in correction territory, having fallen 11.19% from its prior peak. Similarly, the Dow Jones and S&P 500 have dropped 6.70% and 7.68%, respectively, from their 52-week highs.
All the Magnificent 7 stocks have declined on a year-to-date basis in 2025. Out of them, only Meta Platforms Inc. has performed comparatively better than the benchmark indices, while the other six stocks have underperformed the benchmarks.
| Stocks | YTD Performance | One Year Performance |
| Nvidia Corporation (NASDAQ:NVDA) | -15.03% | 30.04% |
| Apple Inc. (NASDAQ:AAPL) | -11.73% | 20.47% |
| Microsoft Corp. (NASDAQ:MSFT) | -7.35% | -8.80% |
| Amazon.com Inc. (NASDAQ:AMZN) | -11.12% | 9.76% |
| Alphabet Inc. Class A (NASDAQ:GOOGL) | -13.48% | 10.19% |
| Alphabet Inc. Class C (NASDAQ:GOOG) | -12.77% | 11.09% |
| Meta Platforms Inc. (NASDAQ:META) | -2.53% | 15.54% |
| Tesla Inc. (NASDAQ:TSLA) | -37.81% | 34.27% |
| SPDR S&P 500 ETF Trust (NYSE:SPY) | -3.00% | 8.96% |
| Invesco QQQ Trust ETF (NASDAQ:QQQ) | -5.75% | 8.36% |
John Murillo, B2BROKER’s chief dealing officer, attributes the current technology stock sell-off to a confluence of factors, including the “interest rate sensitivity,” escalating “trade tensions,” and the outsized influence and weightage of these stocks within key market indices.
Additionally, Edward Yardeni believes China’s development of affordable AI chips and open-source large language models could burst the “AI bubble,” ultimately reducing AI investment and impacting the profitability of the Magnificent 7 stocks.
Price Action: The SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, rose on Wednesday. The SPY advanced 1.09% to $567.13, and the QQQ also jumped 1.34% to $480.89, according to Benzinga Pro data.
On Thursday, the future of Dow Jones rose by 0.28%, whereas the S&P 500 and Nasdaq 100 advanced by 0.41% and 0.55% respectively.
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