Market outlook Invesco QQQ monthly review

Overview

• In March, QQQ declined -4.83% at NAV, outperforming the S&P 500 Index, which declined -4.98%. The Russell 1000 Growth Index returned -5.21%, underperforming QQQ, while the Russell 1000 Value Index returned -4.83%, matching the total return of QQQ.¹
• QQQ’s relative outperformance versus the S&P 500 was primarily driven by its differentiated holdings in the Consumer Discretionary sector and its average underweight in the Industrials sector.
• QQQ saw net outflow of $5.055 billion in March.
• QQQ ended the month with $371.12 billion in AUM and remained the 5th largest ETF in the US (based on AUM).
• For the month of March, shares traded of QQQ increased by 7.74% month-over-month and notional value² traded increased by 5.06% month-over-month. 

Market Recap

QQQ outperformed the S&P 500 in March, breaking a four-month losing streak. QQQ declined -4.83% on an NAV total return basis versus the S&P 500’s decline of -4.98%. Equity markets were broadly down in March amidst a backdrop of significant geopolitical turmoil and ensuing disruption within commodity markets. On February 28^th the U.S. and Israel conducted Operation Epic Fury against Iran, leading to war between the U.S.-Israel alliance and Iran. Armed conflict persisted throughout the month, shaking equity markets and igniting volatility across equity and commodity markets globally. The rapidly developing conflict in the middle east and resulting uncertainty regarding the potential economic impact sparked heightening volatility and broad selling in equity markets as sentiment turned sour and many investors embraced a risk off mentality. 

The selloff in equity markets was felt broadly, spanning market capitalization ranges and style with broad equity indices experiencing significant declines. Mega caps, represented by the Nasdaq Mega Index³, were the relative winners, declining -4.25% in March. The Russell 1000 Value Index declined -4.83%, marginally outperforming the Russell 1000 Growth Index which declined -5.21%. The Russell 2000 Index⁴, representing small caps, declined 5.00% in March and outperformed the Russell MidCap Index, which fell -5.33%.

The VIX Index⁵, a commonly used benchmark for equity market volatility, spiked in March and remained elevated throughout the month. The VIX Index closed March at a level of 25.25, 27% higher than a month earlier and its highest month end closing level since September 2022. The VIX posted the index’s highest daily closing level of 31.05 on March 27^th and its highest intraday of 35.30 on March 9^th, both representing their respective highest levels since April 2025 when markets reacted to the Trump Administration’s announcement of global tariffs. Volatility remained elevated throughout the month with the VIX closing above 20 in all 22-trading day for the first time since April 2025.

In March, Equity market price action was turbulent, reflecting the environment of heightened volatility. Despite a broad downtrend in large‑cap equities over the month, markets exhibited notable volatility, with sharp day‑to‑day swings. The Nasdaq‑100 Index⁶ recorded 12 sessions in which it moved by at least 1% from the prior close in either direction. This was the highest total since April 2025 when the Nasdaq 100 recorded 12 sessions with 1% in either direction. The S&P 500 experienced a similar dynamic recording nine sessions in which it moved by at least 1% from the prior close in either direction, also the highest total since recording 11 in April 2025.

Longstanding tensions between the US and Iran boiled over when President Trump ordered Operation Epic Fury, amid stalled nuclear talks, representing a significant escalation of longstanding tensions between the US and Iran. US/Israel strikes were intended to degrade Iran’s nuclear missile program, eliminate leadership threats and weaken the Islamic Revolutionary Guard Corps. US/Israeli strikes began on February 28^th with ~900 strikes within the first 12 hours targeting significant infrastructure and Iranian leaders. Supreme Leader Ali Khamenei was killed along with dozens of top Iranian officials in the first days. U.S. and Israel conducted Operation Epic Fury which targeted key leaders and infrastructure in the Iranian Regime. 

The war intensified throughout the month with retaliatory strikes by Iran and on Gulf energy infrastructure, oil tankers, and US and allied military bases, with acting Iranian leadership vowing to maintain Strait of Hormuz restrictions. The ongoing conflict and retaliatory restrictions on the Strait of Hormuz resulted in the largest oil disruption in history and shocked global markets causing surging oil prices with the price of Brent Crude Oil⁷ surging from ~$72 a barrel as of February 27^th to a high of $118 a barrel on March 31^st.

Global oil disruption was reflected in gasoline prices domestically with average gas prices surpassing $4 per gallon for the first time since 2022, reigniting concerns of potential for stagflation amidst cooling US labor market conditions and potential for higher inflation.

The Federal Open Market Committee (FOMC)⁸ met during March and did not change the target rate. Stable employment combined with the inflationary fears on the back of rising oil prices contributed to the decision to hold off on cutting the Fed Funds rate.⁹ The geopolitical environment coupled with the stance of the FOMC’s stance poured cold water on market optimism around further rate cuts. As of February 28^th, fed funds futures had priced in two additional cuts by year end. By March 31^st fed fund futures implied a roughly 30% chance of a single cut by the end of the year. 

QQQ Performance

One of the ten sectors represented in QQQ finished March in positive territory. Energy was the best performing sector, returning 2.56%, followed by Basic Materials and Consumer Discretionary, which returned -1.58% and -2.88%, respectively. Consumer Staples was the worst performing sector, returning -9.90%, followed by Real Estate and Industrials, which returned -9.61% and -8.28%, respectively.

QQQ’s relative outperformance versus the S&P 500 was primarily driven by its differentiated holdings in the Consumer Discretionary sector and its average underweight in the Industrials sector. QQQ’s Consumer Discretionary holdings average weight was 20.78% and returned -2.88% in February, while the S&P 500’s Consumer Discretionary holdings average weight was 13.70% and returned -5.06%. QQQ had an average underweight of -7.91% to the Industrials sector in the month.

QQQ’s underweight to Energy was the greatest detractor to the fund’s relative performance. The S&P 500 Index maintained an average weight of 3.77% in Energy companies, which returned 10.29% in March, while QQQ’s Energy holdings average weight was 0.62% and returned 2.56%. QQQ’s 0% exposure to Financial holdings detracted from the fund’s relative performance. The S&P 500 Index maintained an average weight of 9.97% in Financial companies, which returned -3.25% in March.

Marvell Technology was the highest absolute performer within Invesco QQQ for the month of March. Marvell’s stock price appreciation was primarily driven by two catalysts, a strong earnings report and news of a significant strategic investment into the company by Nvidia. On March 5^th Marvell reported its fiscal fourth quarter results. Marvell reported a strong quarter beating analyst expectations from both a top and bottom line perspective. Marvell Technology reported adjusted earnings per share¹⁰ of $0.80, exceeding consensus analyst estimates of $0.79. Additionally, the company reported revenue for the three-month period ending January 31^st of $2.22 billion exceeding the consensus analyst estimate of $2.21 billion. Revenue of $2.22 billion on the quarter marked growth of 22% from a year earlier when the company posted revenue of $1.82 billion. Data center revenue for the quarter was strong reported at $1.65 billion, compared to analyst estimates of $1.63 billion, representing year over year growth of 21%. Full fiscal year revenue for the company was reported as $8.195 billion, growing 42% from the prior year, primarily driven by robust artificial intelligence (AI) demand. The company also reported guidance of fiscal first quarter 2027 of ~$2.28 to $2.52 billion noting that it’s year over year revenue growth rate would accelerate each quarter throughout fiscal year 2027. The report and 2027 fiscal guidance was viewed favorably and Marvell’s stock surged ~21% on March 6^th following the strong report.

Marvell benefitted from additional tailwinds at the end of the month when Nvidia announced a $2 billion investment in Marvell as part of a strategic partnership between the two companies. The partnership would help connect Marvell to the Nvidia AI factory ecosystem through NVLink Fusion offering customers greater choice and flexibility in developing AI infrastructure. Nvidia CEO Jensen Huang stated, “Together with Marvell, we (Nvidia) are enabling customers to leverage Nvidia’s AI infrastructure ecosystem and scale to build specialized AI compute”. News of the strategic partnership resulted in a ~12% jump in Marvell’s stock price to close the month.

Palantir Technologies was another significant contributor during a volatile March. Palantir experienced a number of positive catalysts throughout a month that was plagued with geopolitical headwinds. On March 20th, Reuters reported Palantir’s Maven artificial intelligence system would become an official program of record for the U.S. Department of Defense. The designation as an official program of record is significant in that it secured long term use of Palantir’s technology across the U.S. military promoting optimism of future growth for the company. Deputy Secretary of Defense Steve Feinberg stated that the implementation of the Palantir’s Maven was expected by the end of September. 

On March 30^th, Palantir announced the renewal and expansion of its partnership with Stellantis for another five years. The renewed agreement stems from Palantir’s partnership efforts with Stellantis starting in 2016 and was stated as supporting Stellantis ongoing industrialization and secure use of data and artificial intelligence across the company. The agreement also mentioned that Stellantis will broaden use of Palantir Foundry and begin deploying Palantir’s artificial intelligence platform across select areas of the company. 

Meta also made headlines as the company agreed to spend as much as $27 billion over the next five years for access to artificial intelligence infrastructure from Nebius Group, representing one of the largest single contracts by Meta, highlighting the company’s need for more computing capacity to aid further development of AI products.

Standardized performance - Performance data quoted represents past performance. Past performance is not a guarantee of future results; current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate and Shares, when redeemed, may be worth more or less than their original cost. See invesco.com to find the most recent month-end performance numbers. Market returns are based on the midpoint of the bid/ask spread at 4 p.m. ET and do not represent the returns an investor would receive if shares were traded at other times. Fund performance reflects applicable fee waivers, absent which, performance data quoted would have been lower. Returns less than one year are cumulative. Invesco QQQ’s total expense ratio is 0.18%.

Trading Stats

For the month of March, shares traded of QQQ increased by 7.74% and notional value traded increased by 5.06% month-over-month. The month saw an average of 74.09 million shares traded each day (vs. 68.77 million last month) for an average daily value of $43.91 billion (vs. $41.80 billion last month). That compares to averages of 65.16 million shares and $7.46 billion over the life of the fund, and 55.55 million shares and $31.83 billion for the past 12 months.