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USA Today
20-03-2025
- Business
- USA Today
Nasdaq correction explained: 3 key points every investor must know
Nasdaq correction explained: 3 key points every investor must know Show Caption Hide Caption Nasdaq to open second headquarters in Texas Exchange operator Nasdaq, long known for its Times Square location, said it would open a regional headquarters in Dallas. It's the latest sign that Texas is fast emerging as a major financial hub, rivaling New York. The Nasdaq, along with the S&P 500 and the Dow Jones Industrial Average, roared higher over the past two years, delivering double-digit annual gains. And the momentum continued into this year as investors piled into high-growth companies involved in hot technologies such as artificial intelligence and quantum computing — until recently. Over the past few weeks, a drop in consumer confidence in February and a weaker-than-expected jobs report fueled uncertainty about the economy and the potential effect on corporate earnings. And investors also worried about the impact of certain moves from President Trump — for example, the launch of tariffs on imports from Mexico, Canada and China. Trump introduced the tariffs early last week, though he delayed them by one month on items covered by the United States-Mexico-Canada Agreement. As a result, some of the strongest growth stocks, from Nvidia (NASDAQ: NVDA) to Amazon, have seen their shares tumble and last week dragged the tech-heavy Nasdaq into correction territory. This downturn may make you wonder whether you really should be buying stocks right now. Before deciding, though, here are three things every investor should know about the Nasdaq correction. 1. Corrections don't necessarily mean a bigger drop is ahead. The Nasdaq entered a correction on March 6, falling more than 10% from a peak on Dec. 16, though it showed signs of recovery during the next trading session, ending the week down by 9.8% from that point. (For an index to be considered in correction territory, it must fall by 10% to 20% from its most recent high.) It's too early to say whether this correction period will last, but here's a positive point to keep in mind: History shows us that corrections generally have led to positive performance. Of 11 Nasdaq corrections since 2010, 10 have resulted in positive performance in the 12 months to follow, and the average annual gain has been more than 21%. Of course, history doesn't always repeat itself, but at least this trend shows us corrections don't necessarily mean a bigger drop is just ahead. 2. Today is an excellent time for bargain hunting. No investors like seeing stocks in their portfolio tumble. But there is one positive point about a market correction, and that's the opportunity to add to some of your favorite positions, potentially for a bargain — and find new buying opportunities, too. Though we all loved seeing stocks soar in recent times, the downside was that valuations of many players took off, too. We can use prices of S&P 500 stocks as an example, and one of the best ways to do this is by looking at the Shiller CAPE ratio. This metric considers stock prices and earnings per share over a 10-year period to adjust for fluctuations in the economy. As the bull market roared higher, this measure reached the level of 37, something it's done only twice before since the launch of the benchmark as a 500-company index in the late 1950s. Though it still is high at the level of 35 today, it has started to come down. And this happens as many stocks, including Nasdaq players such as Nvidia and Amazon, drift into bargain territory as part of the current market declines. Nvidia now trades for 25 times forward earnings estimates, down from 48 earlier this year. And Amazon now trades for 31 times forward estimates, compared with 45 just a few months ago. So now looks like a great time to go bargain hunting. 3. Increase your chances of winning by focusing on the long term. Okay, so I know it's hard to just ignore what's going on at the moment, especially if your portfolio is suffering. But at times like this, it's important to shift your focus from today to the long term. If you look at stock performance from this perspective, you'll notice that indexes always have recovered after tough periods and gone on to advance, as we can see in this chart of the Nasdaq's performance since 2010 — the time of the first correction I mentioned earlier. In fact, each correction looks small from this lens, suggesting that if you invest in quality companies or related assets such as exchange-traded funds, these tough times probably won't affect your returns by much at all. By long term, I mean holding on for at least five years, but even better if the stocks you select make great holdings for 10 years or longer. That's why it's crucial to go for companies with solid long-term prospects that won't be significantly hurt during times of economic headwinds and tough markets. If you do this, you'll sleep a lot easier during market corrections, feel better about scooping up those bargains I talked about, and potentially set yourself up for a long-term win. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Adria Cimino has positions in Amazon. The Motley Fool has positions in and recommends Amazon and Nvidia. The Motley Fool has a disclosure policy. The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY. Don't miss this second chance at a potentially lucrative opportunity Offer from the Motley Fool: Ever feel like you missed the boat in buying the most successful stocks? Then you'll want to hear this. On rare occasions, our expert team of analysts issues a 'Double Down' stock recommendation for companies that they think are about to pop. If you're worried you've already missed your chance to invest, now is the best time to buy before it's too late. And the numbers speak for themselves: Nvidia:if you invested $1,000 when we doubled down in 2009,you'd have $292,207!* Apple: if you invested $1,000 when we doubled down in 2008, you'd have $45,326!* Netflix: if you invested $1,000 when we doubled down in 2004, you'd have $480,568!* Right now, we're issuing 'Double Down' alerts for three incredible companies, and there may not be another chance like this anytime soon.
USA Today
20-03-2025
- Business
- USA Today
Barley farmers face economic strain with tariffs as beer consumption hits 40-year low
Barley farmers face economic strain with tariffs as beer consumption hits 40-year low Show Caption Hide Caption Nasdaq to open second headquarters in Texas Exchange operator Nasdaq, long known for its Times Square location, said it would open a regional headquarters in Dallas. It's the latest sign that Texas is fast emerging as a major financial hub, rivaling New York. Overdue loans and mounting interest payments often weigh on Montana barley grower Mitch Konen as he bales hay and loads trailers at his remote farm overlooking the snow-capped Rocky Mountains. As spring sunshine warms the fields, Konen, 65, and other barley farmers worry tariffs will take away crucial export markets and increase the cost to grow the grains, even as sinking U.S. beer consumption has slashed demand for barley. "Down here on the farm we're already stretched pretty thin financially," said Konen, who is also vice president of the National Barley Growers Association. "It makes us wonder whether or not we can even stay in business." Roughly half of Konen's barley is destined for Mexico, where it will be turned into beer. Some will be shipped back to the U.S. in bottles of Modelo, Corona and Pacifico. Mexico is the third largest importer of U.S. barley and the biggest importer of U.S. malt, made from germinating kernels of barley and a key ingredient in beer. If Mexico issues tariffs in retaliation or switches to buying barley from other trading partners, experts say it could deal another economic blow to American farmers as U.S. consumers increasingly ditch beer. Canada, the largest importer of U.S. malt barley, issued tariffs against U.S. barley and other agricultural goods that went into effect on March 4. Frayne Olson, crop economist at North Dakota State University, said farmers are worried that tariffs could decimate U.S. barley exports to Canada. Alcohol and trade wars: Tariffs might not happen but tequila is already paying the price U.S. President Donald Trump has said his back-and-forth tariffs against major trading partners are intended to curb the flow of illegal drugs and migrants into the U.S., and has downplayed the market impacts for U.S. companies and consumers. "The people who pay for tariffs are the farmers," said barley farmer Steve Sheffels, vice president of the Montana Grain Growers Association. "We grow way more barley than we can possibly consume, so if those markets go away, then farmers are going to be competing for a much more limited number of buyers." Costs for fertilizer, which is mostly sourced from Canada, will rise with tariffs. Prices for imported crop chemicals from China have already risen because of tariffs that took effect on February 4. "There's a sinking feeling and a feeling of dread that things are bad, and things are going to stay bad for a while," Sheffels said. "We are scared almost to death about tariffs." A slow decline Beer consumption in the U.S. has been sliding and in 2024 it hit its lowest level in over 40 years as more Americans chose other alcoholic beverages, said Bart Watson, chief economist at the Brewers Association. Recently, hard seltzer drinks and canned cocktails have posed particularly bruising competition to beer. Others are giving up alcohol altogether. Gen Z-ers and millennials are drinking less than most previous generations, according to a 2024 Gallup poll. In January, former U.S. Surgeon General Vivek Murthy called for cancer warnings on alcoholic drinks. Multiple high-profile studies have stated no amount of alcohol is safe to drink. Watson believes major beer companies such as Anheuser-Busch, maker of Bud Light and Michelob Ultra, may keep prices steady to preserve market share and maintain sales volume. Craft breweries may be less able to absorb higher costs and are likely to raise prices, he said. The 25% tariffs the White House has slapped on metals will likely hike the costs brewers pay for kegs and cans, which are often made from steel and aluminum imported from Canada. The price of a bottle of Corona or Modelo, both produced in Mexico, may be more likely to spike if U.S. malt is subject to tariffs by Mexico as it heads south and the finished beer is slapped with tariffs again as it is shipped north. "Breweries are going to have to choose to pass this along or choose to eat it," Watson said. "It will have an impact." Reporting by Heather Schlitz. Editing by Emily Schmall and David Gregorio
