Market outlook

QQQ quarterly outlook report

Senior Factor & Core Equity Strategist Ryan McCormack shares quarterly highlights and the outlook for Invesco QQQ ETF
Performance takeaways

Invesco QQQ advanced by 8.66% on an NAV total return basis but underperformed the S&P 500® Index in Q1 2024.


QQQ’s overweight allocations and underperformance within the Consumer Discretionary and Telecommunications sectors were the biggest detractors from relative performance versus the S&P 500 Index in Q1.

QQQ Q1 Performance

Invesco QQQ ETF (QQQ) picked up where 2023 left off with strong performance in Q1 2024. The fund advanced by 8.66% for the quarter (on an NAV basis, 12/31/2023 – 03/31/2024) but underperformed the S&P 500’s total return of 10.55%. Earnings releases for equities, including the “Magnificent 7” were mixed, with companies providing guidance that exceeded analysts’ expectations mostly rewarded.1 The prospect for an economic soft landing remained, as market participants weighed commentary from the Federal Reserve and debated when or if the Federal Open Market Committee (FOMC) would employ rate cuts.2 A perceived dovish Fed meeting in March helped to ease some concerns about additional rate hikes from the FOMC.

QQQ’s overweight exposure and underperformance within the Consumer Discretionary and Telecommunications sectors (per Industry Classification Benchmark- ICB) were the largest detractors to relative performance against the S&P 500 Index.3 Consumer Discretionary averaged an 18.46% weighting in QQQ (vs. a 14.21% weighting in the S&P 500 Index) and advanced by 3.19% (vs. +7.90% in the S&P 500). Telecommunications averaged a 4.66% weighting in QQQ (vs. 2.19% in the S&P 500) and declined by 1.95% (vs. +4.71% for the S&P 500) for the quarter.

Within the Consumer Discretionary sector, Tesla was the worst performing stock in QQQ and the largest detractor from relative performance as the electric vehicle manufacturer fell by nearly 30% for the quarter. The stock fell by over 12% in the session after reporting Q4 2023 earnings after the close on January 24th. Quarterly revenue of $25.17 billion missed analysts’ expectations for $25.87 billion and comparable adjusted earnings per share (EPS) of $0.71 fell short of estimates for $0.73.4 CEO Elon Musk cautioned that sales growth would slow for 2024, which disappointed investors amid concerns around softening demand despite price cuts at the automaker. These price cuts have weighed on gross margin, and along with increased competition from Chinese automakers in the EV market have put pressure on the stock. In early March, shares declined after a report on February shipments to China showed a 16% month-over-month decline and a 19% year-over-year decline. Tesla averaged a 2.81% weighting in QQQ vs. a 1.30% weighting in the S&P 500 in Q1.

The Telecommunications sector in QQQ was dragged lower by Charter Communications, down over 25% for the quarter. The stock was lower by over 16.5% on February 2 after it reported Q4 2023 comparable adjusted EPS that missed analysts’ expectations. The comparable $7.07 was nearly 20% lower than the $8.81 estimate from analysts. The company announced that it lost 61,000 broadband internet customers in Q4 vs. a 105,000 increase one year earlier.    

Of note, the Technology sector was a positive contributor to relative performance against the S&P 500 Index. Technology averaged a 59.22% weighting in QQQ vs. a 34.00% weighting in the S&P 500 Index and advanced by 12.63% (vs. the sector’s 14.10% return in the S&P 500 Index). Following the trend of calendar year 2023, NVIDIA was the best performing stock in QQQ for the quarter and was the largest contributor to relative performance against the S&P 500 Index after its 82.46% total return. The company’s stock surged by over 16% on February 22, the session immediately following another impressive earnings release after the close on February 21. NVIDIA reported comparable adjusted EPS of $5.16, over 12% better than analysts’ forecasts for $4.60. The figure represented over 28% quarter-over-quarter growth and a staggering 486% year-over-year growth. Revenue painted a similar picture with NVIDIA’s reported $22.10 billion, surpassing analysts’ estimates by over 8%, and representing ~22% quarter over quarter growth and 265% year-over-year growth. NVIDIA noted that revenue in the current quarter would be ~$24 billion, better than the $21.9 billion estimated by analysts. CEO Jensen Huang noted that demand for NVIDIA’s chips would continue to outpace demand for the year and said generative Artificial Intelligence (AI) and accelerated computing are at a “tipping point” with demand across industries and geographies.

Source: Bloomberg L.P., as of 3/31/2024. 
Note: All periods represent calendar years. Click for standardized performance. Performance data quoted represents past performance, which 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 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. An investor cannot invest directly in an index. Index returns do not represent Fund returns. Returns less than one year are cumulative. Please keep in mind that high, double-digit and/or triple-digit returns are highly unusual and cannot be sustained.

New Addition

Over the course of the quarter, one company was deleted from the Nasdaq 100 Index (and QQQ) and one company was added to the index (and QQQ). Splunk was deleted from the Index after it was announced that Cisco completed its acquisition of the company on March 19. Splunk was replaced in the Nasdaq 100 Index (and QQQ) by Linde PLC, an industrial gas and engineering company. Linde changed its listing from the New York Stock Exchange to the Nasdaq Exchange in November 2023.

Single stock performance

The best-performing stocks in QQQ for Q1 were NVIDIA Corp (+82.46%), Constellation Energy (+58.45%) and Doordash Inc. (+39.27). The worst performers for the quarter were Tesla Inc. (-29.25%), Sirius XM Holdings Inc (-28.69%) and Charter Communications Inc (-25.23%). 

Market drivers during Q1

Price gauges remained in focus as investors looked indications that inflation continues to ease. Over the course of the quarter, we saw three Consumer Price Index (CPI) releases measuring prices for December (released in January), January (released in February) and February (released in March).5 The year-over-year readings came in at 3.4%, 3.1% and 3.2%, respectively. Similarly, the year-over-year Personal Consumption Expenditure (PCE) report for February (released in late March) showed an acceleration in prices from the January report, moving to 2.5% from 2.4%.6

Over the course of Q1, the Federal Open Market Committee (FOMC) met twice, in January and March. In both meetings the FOMC kept its rate target steady at 5.25% - 5.50%, where it has remained since July 2023, marking the fourth and fifth consecutive meetings without change. Despite the February increase in CPI, Chairman Powell noted that trend for prices continued lower towards the Fed’s long-term target of 2% (the February PCE report was released after the Fed meeting). The updated release of the Fed’s dot plot shows that participants still forecast three 0.25% rate cuts by the end of the year.7 As the report was released along with Chairman Powell’s press conference, equities traded higher during the March 20th trading session as the reaffirmation for three expected rate cuts for 2024 gave investors optimism. The March meeting also brought an update to the Fed’s Summary of Economic projections.8 The most apparent change was the increase in Gross Domestic Product (GDP) estimates for 2024 and 2025, with the 2024 projection rising to 2.1% from the 1.4% estimate in December and the 2025 projection rising to 2.0% from the 1.8% estimate in December.9 The 2026 number rose marginally to 2.0%, up from December’s 1.9% estimate. The 2024 Core PCE inflation number also saw a higher projection to 2.6%, up from the 2.4% estimate in December, although the 2025 and 2026 forecasts did not change at 2.2% and 2.0%. Headline PCE inflation estimates only changed for 2025, increasing slightly to 2.2% from 2.1%.

The labor market continues to show strength, with all three unemployment rate readings for the quarter remaining under 4%. Every weekly reading of initial jobless claims remained under 230K, well under the 300K figure, which generally is the dividing line between a strengthening and weakening job market.10 Despite some upward trending weeks in 2022, the claims figure has remained decidedly lower than 300K. While maintaining maximum sustainable employment is one of the Fed’s dual mandates (along with price stability), the strong labor market has been a double-edged sword for market participants. On one hand, it fuels the narrative for the economic soft-landing narrative but also can also put upward pressure on prices in the form of wage growth. Chairman Powell has been very deliberate in discussing the Fed’s focus on the labor market and its implications for Fed policy.

Source: Bloomberg L.P., as of 03/31/2024


The market’s keen interest on Fed policy is not likely to change anytime soon. Particularly as concerns of a reacceleration in inflation readings may be a precursor to the Fed turning more hawkish in the form of delayed interest rate cuts, or even future hikes. The FOMC is scheduled to meet twice during the quarter, first on April 30-May 1 and again from June 11-12. At present, market participants, through Federal Funds futures, have a 2.6% chance of a rate cut at the April/May meeting and a 16.2% chance of a rate cut at the June meeting.11 These percentages are market driven and can (and usually will) change on a daily basis. Commentary from Fed officials along with notable economic releases (like price data) can affect these figures as well as the equity markets broadly. Releases of price data like CPI, the Producer Price Index (PPI), PCE and others will be followed closely over the course of the quarter as participants try to gauge falling inflation readings and subsequent timing of a potential rate cut.12

Earnings is always a key focus, particularly with the largest QQQ holdings. NVIDIA’s earnings release has seemingly become one of the market’s most followed events and the company is scheduled to report Q1 results in mid to late May. Following CEO Jensen Huang’s comments that AI adoption is at a “tipping point,” investors will look to the release of Q1 revenue and earnings as confirmation of this level of demand. Additionally, focus will likely remain on whether the company can meet or beat its previous revenue guidance, along with any forecasts for the following quarter. Another earnings release to watch will be from Broadcom Inc., scheduled for mid-June. Broadcom represents the largest overweight security vs. the S&P 500 Index and has a 4.50% weighting in QQQ. Although the company surpassed EPS and revenue expectations at its Q1 earnings release in early March, the company maintained its full-year guidance that was first issued in December. This disappointed investors that were anticipating an upgraded number, and the stock fell by ~7% in the session following the announcement. Strong results and improved guidance would likely be beneficial for stock performance along with QQQ relative performance vs. the S&P 500 Index.


  • 1

    The Magnificent Seven stocks are a group of high-performing and influential companies in the U.S. stock market: Alphabet, Amazon, Apple, Meta, Microsoft, NVIDIA, and Tesla.

  • 2

    The Federal Open Market Committee (FOMC) is a 12-member committee of the Federal Reserve Board that meets regularly to set monetary policy, including the interest rates that are charged to banks.

  • 3

    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.

  • 4

    Earnings per share is the monetary value of earnings per outstanding share of common stock for a company.

  • 5

    The Consumer Price Index (CPI) measures the average change in prices over time that consumers pay for goods and services.

  • 6

    The Personal Consumption Expenditures Price Index is a measure of the prices that people living in the United States, or those buying on their behalf, pay for goods and services.

  • 7

    The Federal Reserve’s “dot plot” is a chart that the central bank uses to illustrate its outlook for the path of interest rates.

  • 8

    The Federal Reserve’s Summary of Economic Projections (SEP) sheds light on the central bank's expectations for economic growth, inflation, employment, and interest rates.

  • 9

    GDP measures the monetary value of final goods and services produced in a country in a given period of time.

  • 10

    Initial Jobless Claims measures the number of individuals who filed for unemployment insurance for the first time.

  • 11

    Fed fund futures are derivatives based on the federal funds rate, the U.S. overnight interbank lending rate on reserves deposited with the Fed.

  • 12

    The Producer Price Index measures the average change over time in selling prices received by domestic producers of goods and services.

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