
Innovation R&D: A long-term investment
See why long term investment strategies should factor in research and development. A company's R&D strategy may lead to durability and better returns.
April provided market participants with no shortage of substantial developments with significant repercussions for equity and fixed income markets alike. Market optimism following the November general election gave way to an air of consternation presented in the form of violent intraday price swings and significantly increased volatility. Equity markets posted mixed results in the month of April as represented by the S&P 500 declining incrementally month over month with a decrease of -0.68%. Meanwhile, the Nasdaq-100 Index increased modestly month over month posting an increase of 1.55%.
April headline returns for both the Nasdaq 100® Index and S&P 500 appear relatively unremarkable at first glance; market action was anything but. Equity markets shrugged off tariff related jitters surrounding the April 2nd scheduled “Liberation Day” announcements and posted marginal gains in each of the first two trading sessions of the month. On April 2nd, President Trump announced the long-awaited details of his administration’s wide scale tariffs policy which included implementation of a 10% minimum rate on all imports entering the United States. In addition to the 10% baseline, was the inclusion of a set of substantially higher tariffs which varied by country and targeted many of the United States most significant trading partners. The most notable inclusion came in the form of substantial tariff increases of 34% related to Chinese imports.
The news was met with increased trepidation by equity markets. Pain ensued as markets fell in each of the next four trading sessions. Large cap equities moved steeply lower following the “Liberation Day” announcements, with the Nasdaq 100 opening 4.12% below the previous days close, finishing the day down 5.41%. Meanwhile the S&P 500 opened 3.14% below the previous close ending the day down 4.84%. The following day, on April 4th, both the Nasdaq 100 and the S&P 500 experienced significant gaps down upon market open, with the S&P 500 opening 1.93% below the previous closing level, finishing the day down 5.97%, while the Nasdaq 100 opened 2.70% below the previous close sliding further throughout the day to close 6.07% below the previous day’s levels.2 From the “Liberation Day” announcements on April 2nd to April lows set on April 8th( 17,090.40), the Nasdaq 100 fell 12.72%, 22.93% below the all-time high (22,175.60) set on February 19th. Concurrently, on April 8th, the S&P 500 fell 12.14% below its closing level to its April low (4,982.77), nearly 18.90% below its respective all-time high (6,144.15), also set on February 19th.
On April 9th, President Trump announced a 90 day pause on country specific tariffs providing a catalyst for one of the most remarkable single day upswings on record. The S&P 500 posted a single day return of 9.52%, 10.28% above its low on the day, while the Nasdaq 100 finished the day up 12.02%. 12.08% above its low on the day. April 9th marked the 4th largest single day increase on record for QQQ, with a NAV return of 12.02%.
The VIX Index, a commonly used gauge for volatility and investor fear, closed April at 24.78.3 Volatility continued to rise, marking the 3rd consecutive month over month increase in the VIX closing level. Volatility spiked considerably with the VIX reaching a high closing price of 52.33 on the 8th, the highest closing level since March 2020. On an intraday basis, the VIX reached as high as 60.13 on April 7th. Volatility remained significantly elevated through April 11th, before gradually diminishing into month end.
The Federal Open Market Committee (FOMC) did not meet in April.4 However, the Federal Reserve (Fed) Chairman Jerome Powell was still a regular within the headlines. President Trump has been a vocal critic of the Chairman and Federal Reserve Policy. Tension between the White House and FOMC added an additional layer of discomfort for investors.
Despite heightened concerns over the potential inflationary pressures of US Tariffs, April presented the market with positive reports on the inflation front. The Consumer Price Index (CPI) reading was at 2.4%, lower than the consensus estimate by 0.1%.5 The year-over-year Core CPI reading (which strips out the more volatile food and energy components) was reported at 2.8%, 0.2% lower than consensus estimate. Meanwhile, the Core Personal Consumption Expenditure (PCE), the FOMC’s preferred inflation gauge printed in line with estimates at 2.6% YoY.6
From a sector perspective, seven of the ten sectors that QQQ has exposure to finished in negative territory for April. Energy was the worst performing, declining by 18.41% for the month. Relative QQQ outperformance versus the S&P 500 was driven by its overweight exposures and differentiated holdings within the Technology and Consumer Discretionary sectors. The Technology sector averaged a 56.90% weighting for the month and saw a total return of 2.19%, compared to the sector’s average weight of 34.58% in the S&P 500 and a total return of 1.47%. Within QQQ, the Consumer Discretionary sector averaged a 20.00% weighting for the month and saw a total return of 4.81%, compared to the sector’s average weight of 14.52% in the S&P 500 and a total return of 1.87%.
Standardized performance - Performance quoted is past performance and cannot guarantee of comparable future results; current performance may be higher or lower. Visit invesco.com/performance for the most recent month-end performance. Investment returns and principal value will vary; you may have a gain or loss when you sell shares. Fund performance reflects fee waivers, absent which, performance data quoted would have been lower. Invesco QQQ’s total expense ratio is 0.20%. Index performance does not represent fund performance. Please keep in mind that high, double-digit and/or triple-digit returns are highly unusual and cannot be sustained.
Energy and Real Estate were the worst performing sectors in QQQ, down 18.41% and 6.39%, respectively. Energy averaged a 0.55% weight in QQQ for April, while Real Estate averaged a 0.23% weighting over the course of the month.
In addition to being an eventful month from a macroeconomic and policy standpoint, April also marked the beginning of the quarterly earnings season. In April, 41 companies held in QQQ reported quarterly earnings with 31 of the 41 companies exceeding earnings estimates, or 75% of companies beating analyst expectations.
Netflix was one of the first companies held by QQQ to report, announcing their quarterly results on April 17th. Netflix reported very strong results with diluted earnings per share of $6.61, considerably above the consensus analyst estimate of $5.68 per share.7 Reported earnings were ~16.3% above consensus analyst estimates. On the top line, Netflix reported revenue of $10.542 billion which was slightly above consensus analyst estimates of ~$10.50 billion for a marginal positive surprise of 0.44%. In addition, Netflix also reported operating income and free cash flow that were significantly higher than estimates. Operating income for the quarter totaled ~$3.35 billion, ~11.7% above the consensus estimate of $2.99 billion. Further, the positive surprise was even more considerable in free cash flow which was reported ~30.7% above the consensus estimate. Results were in large part driven by a combination of membership growth and price increases. Investors also seemed encouraged after Netflix provided revenue guidance of ~15% year-over-year growth for the second quarter, better than analyst forecasts. Shares rose 4.5% after hours on the announced results and finished the month up 21.36% with an average weight of 2.98% for the month. Netflix’s monthly return was the 4th highest for stocks held within QQQ.
Another notable earnings announcement came from Tesla on April 22nd following market close. Tesla’s quarterly results were noticeably weak, as reported earnings per share on an adjusted basis came in at $0.27, considerably below analyst expectations of $0.43. Tesla reported underwhelming quarterly delivery results in the weeks leading into earnings. Additionally, Tesla announced they would be suspending earnings guidance due to “market turmoil”, leaving investors with the promise to revisit forward guidance in the future. However, from the market’s perspective the most significant information to come from the announcement was regarding how Tesla CEO Elon Musk would be allocating his time between Tesla and the Department of Government Efficiency. Elon Musk remarked, “I’ll continue to spend a day or two per week on government matters for as long as the President would like me to do so… Starting next month, I'll be allocating far more of my time to Tesla.”. On April 23rd, the first trading session following the announcement, the market met Musk’s comments favorably as shares of Tesla increased ~5% from the previous day’s closing price of 237.97 to 250.74.
Technology titan, Alphabet also reported very strong results for the quarter on April 24th. Alphabet reported adjusted earnings per share of $2.81, ~37% above analyst expectations. In discussing the strong results and healthy growth across business segments, Alphabet CEO Sundar Pichai commented, “Underpinning this growth is our unique full stack approach to AI”. Another key driver to Alphabet’s results was the company’s strong advertising revenue. Advertising revenue was reported at $66.8 billion, above analyst expectations of $66.4 billion. Additionally, cloud computing revenue displayed healthy growth of 28% year-over-year, despite reported results being slightly below analyst expectations. Lastly, capital expenditure (CAPEX) towards its artificial intelligence (AI) segments totaled $17.2B and was notably in line with the analyst expectations.8 In the first trading session following announcement, April 25th, Alphabet shares rose ~1.7% from the previous day’s closing price of 159.28 to 161.96.
For the month of April, shares traded of QQQ rose by 39.07% month-over-month along with notional value traded rising by 29.27% month-over-month. The month saw an average of 65.06 million shares traded each day (vs. 46.78 million last month) for a value of $29.14 billion (vs. $22.54 billion last month). That compares to averages of 65.53 million shares and $6.59 billion over the life of the fund, and 36.61 million shares and $17.58 billion for the past 12 months.
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All data sourced from Bloomberg L.P. as of 4/30/2025 unless otherwise noted. An investor cannot invest directly in an index.
Past performance is not a guarantee of future results.
This does not constitute a recommendation of any investment strategy or product for a particular investor. Investors should consult a financial professional/financial consultant before making any investment decisions.
The opinions expressed are those of the author, are based on current market conditions and are subject to change without notice. These opinions may differ from those of other Invesco investment professionals.
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The Index and Fund use the Industry Classification Benchmark (“ICB”) classification system which is composed of 11 economic industries: basic materials, consumer discretionary, consumer staples, energy, financials, health care, industrials, real estate, technology, telecommunications and utilities.